It will be recalled that we reported earlier this year on the significant decision of the English High Court that the Serious Fraud Office had acted unlawfully in deciding – on "public interest" grounds – to discontinue its investigation into allegations of corruption against BAE Systems in relation to military aircraft contracts with Saudi Arabia. BAE had resisted compliance with a formal request for disclosure of details of payments to agents and consultants in connection with the contract in question, on grounds that disclosure of that information would adversely affect relations between the UK and Saudi Arabia. In particular, the Saudis would regard disclosure as a serious breach of confidentiality.

The SFO's subsequent decision to abandon its investigation was challenged by judicial review and ultimately declared unlawful by the High Court. This upon the basis that it was inappropriate for the SFO to discontinue its investigation on public interest grounds, as this would be contrary to the constitutional principle of the rule of law.

That decision has now been overturned by the House of Lords, which, in a very significant decision, held that there was legitimate public interest reasons in all the circumstances of this case for the SFO to discontinue its investigation. In particular, the SFO's decision had been justified by reference to the protection of the public and having regard to the fact that this decision had only been exercised reluctantly in all of the circumstances. Specifically, the Director of the SFO had been entitled to have very careful regard to the serious threat which had apparently been made by the Saudi Government, to the effect that it might withdraw security co-operation with the UK, and the public interest implications which the fulfilment of such a threat might have for the protection of the public in the UK.

It is clear that certain of their Lordships hearing the appeal were sympathetic to the principle approach which had been taken by the High Court, but were ultimately persuaded. Baroness Hale of Richmond states in the Judgment as follows:

"I am therefore driven to the conclusion that [the Director of the SFO] was entitled to take these things into account. I do not however accept that this was the only decision he could have made. He had to weigh the seriousness of the risk, in every sense against the public interest considerations. These include the importance of upholding the rule of law and the principle that no-one, including powerful British companies who do business with powerful foreign countries is above the law. It is perhaps worth remembering that it was BAE Systems, or people in BAE Systems who were the target of the investigation and of any eventual prosecution and not anyone in Saudi Arabia. The Director carried on with the investigation despite their earnest attempts to dissuade him. He clearly had the countervailing factors very much in mind throughout as did the Attorney General. A lesser person might have taken the easy way out and agreed with the Attorney General that it would be difficult on the evidence to prove every element of the offence. But he did not.

"Although I would wish that the world were a better place where honest and conscientious public servants were not put in impossible situations such as this, I agree that his decision was lawful and this appeal must be allowed".

In all the circumstances, the final outcome is not perhaps as surprising as the previous High Court decision had been defiantly robust in its upholding of the principle of the rule of law. The House of Lords did however make it very clear that this case does not legitimise the abandonment of proceedings on public interest grounds, the BAE case being exceptional and each case requiring to be considered upon its facts.