The UK’s Serious Fraud Office (SFO) has won the right to appeal against a ruling that says it acted unlawfully in dropping an enquiry into Bae.

Earlier this month the High Court ruled the SFO acted unlawfully by dropping the corruption inquiry into a £43bn BAE Systems arms deal with Saudi Arabia.

The al-Yamamah deal with Saudi Arabia was first signed in 1985 but ran into the 1990s and involved BAE selling Tornado and Hawk jets, other weapons and long-running maintenance and training contracts.

BAE was accused of making illegal payments to Saudi officials in order to win the contract.

The SFO investigation into the bribery allegations was abruptly cancelled in 2006 by then Prime Minister Tony Blair in the interest of national security.

The case was brought by Corner House and the Campaign Against Arms Trade, who said the SFO decision to drop the enquiry was influenced by government concerns about trade and diplomatic ties with Saudi Arabia.

The court ruling said the SFO had been subject to unlawful pressure and “blatant threats” from the Saudis.

The SFO contends national security would have been undermined by the inquiry while BAE maintains it acted lawfully.

By Elizabeth Clifford-Marsh