The issue in this appeal is whether a decision made by the appellant, the Director of the Serious Fraud Office, to discontinue a criminal investigation was unlawful. The Queen’s Bench Divisional Court held that it was.  That court accordingly quashed the Director’s decision and remitted it to him for reconsideration. In this appeal to the House the Director contends, as he contended below, that the decision was not unlawful.

In 2004, as authorised by section 1(3) of the Criminal Justice Act 1987, the Director launched an investigation into allegations of corruption against BAE Systems Plc. One aspect of the investigation concerned the Al Yamamah contract, a valuable arms contract between Her Majesty’s Government and the Kingdom of Saudi Arabia for which BAE was the main contractor. The contract contained a confidentiality clause binding on both Governments. A valuable extension to the contract, providing for the supply of Typhoon aircraft, was in course of negotiation in 2004-2006. Between 2004 and 2006 a team of SFO lawyers, accountants, financial investigators and police officers investigated the allegations of corrupt payments allegedly made by BAE in connection with this contract. During the investigation the SFO issued a number of statutory notices to BAE seeking information and disclosure, one such notice being in relation to details of payments to agents and consultants in connection with the Al Yamamah contract.

BAE refused to supply the information on the basis that to do so would adversely affect relations between the UK and Saudi Arabia and jeopardise the Al Yamamah contract because the Saudis would regard it as a serious breach of confidentiality by BAE and HMG.

After various meetings, discussions and exercises, it was decided that the investigation should continue.  On learning that the SFO were attempting to gain access to Swiss bank information, the Saudi authorities stated that if the Al Yamamah investigations continued, Saudi Arabia would withdraw from existing bilateral counter-terrorism co-operation arrangements with the UK, withdraw co-operation from the UK in relation to its strategic objectives in the Middle East and end the negotiations then in train for the procurement of Typhoon aircraft. 

At first, it was decided that if the case against BAE was soundly based, it would not be right to discontinue it on the basis that the consequences threatened by the Saud representatives may result.  However, following further discussions involving the Director, the Assistant Director, HM Ambassador to Saudi Arabia, the Attorney General, the Prime Minister, Prince Bandar, National Security Adviser to the Kingdom of Saudi Arabia, the Legal Secretary to the Law Officers and the Solicitor General, the Director confirmed to the Legal Secretary that, in his view, continuing the Al Yamamah investigation would risk serious harm to the UK’s national and international security.  He accordingly decided that the Al Yamamah investigation should be discontinued.  The press release in this regard read that it had been necessary to balance the need to maintain the rule of law against the wider public interest and that no weight had been given to commercial interests or to the national economic interest. 

The House looked at the fact that the Director only “gave way” when he was convinced that the threat of withdrawal of Saudi security co-operation was real and that the consequences would be an equally real risk to “British lives on British streets”.  The House then asked whether it was lawful for the Director to take this into account.

The House of Lords held that the Director was entitled to take this into account.  It was a question of public interest and public safety.  The House unanimously allowed the appeal.