Relatives of victims and crash survivors led calls for a clearer law on corporate killing after an Old Bailey judge threw out the Crown Prosecution Service case against Great Western Railways.
Mr Justice Scott Baker said that the CPS case was "not applicable" under current legislation. He said the prosecution had been pursued despite Law Commission recommendations that the law needed to be changed before corporate manslaughter charges can be brought.
Seven people died and 160 were injured when the GWR Swansea to Paddington express ran into a goods train at high speed. GWR had been charged with corporate manslaughter and health and safety breaches, and the driver was also charged with manslaughter.
The collapse of the case brought further criticism of the CPS's handling of the affair. It has already been attacked for the long delay in bringing charges, laid only last December, which has in turn delayed the public inquiry into the accident until September.
Desmond Collins, of Collins solicitors, who is representing more than 40 of the victims, said: "The passengers are entitled to a full and immediate answer as to why we should wait for almost two years to achieve absolutely nothing. The truth is, in fact, that there can be no possible justification for the indecision and delay that have been the hallmarks of this investigation and prosecution."
Detective Superintendent Graham Satchwell of the British Transport Police, who has led the investigation into the crash from the beginning, was among those calling for changes in the law.
"We need an Act of Parliament that will create an offence of corporate killing and, with other ingredients of man-slaughter by gross negligence, allow the prosecution to aggregate blame on corporate killing," he said after the case.
Seven manslaughter charges against the driver of the express, 52-year old Larry Harrison, were also dropped after the Crown said it would be offering no evidence because of psychiatric reports saying Mr Harrison, who denied the charges, had been psychologically damaged by the accident and its consequences. GWR did, however, admit health and safety breaches. It will be sentenced on those counts later this month.
John Body, 57, who survived the accident, said that all the CPS seemed to have done was delay the inquiry. "It has just intensified my anger," he said. "We need to know what went wrong so it doesn't happen again." He was one of hundreds of passengers on the express.