Terror compensation cases will be held behind closed doors under Government plans to stop payouts to terrorists, Justice Secretary Kenneth Clarke said today.
Rules covering civil court cases mean claimants can demand access to all of the intelligence gathered by the Security Services about them and officials have little choice but to risk disclosing secret techniques and details about live operations or pay up.
The proposals, outlined in a green paper on justice and security, come after secret multimillion-pound payouts were made to 16 terror suspects, including former Guantanamo Bay detainee Binyam Mohamed, last November after they claimed they had been mistreated by security and intelligence officials.
Mr Clarke said: "The Government is clear that under the current system, justice is not being served and our national security is being put at risk.
"For justice to be done and the rule of law to be upheld, courts should be able to consider all of the facts of the case.
"At the moment, we are not always getting at the truth because some evidence is too sensitive to disclose in open court.
"The current system is failing to serve the public interest. Government cannot defend its actions. The security and intelligence agencies are unable to defend their reputations and get on with the vital job of keeping us safe."
An impartial and independent judge will have the power to review the Government's statement that national security would be damaged if evidence were openly disclosed, helping to "ensure that closed procedures are only used where absolutely necessary", he said.
"Without such procedures, our sensitive techniques and methodologies could be put at risk, along with the lives and safety of individuals and the vital overseas relationships we depend on to protect UK national security," he said.
"Damage to intelligence-sharing relationships has a direct impact on the Government's ability to safeguard the public and to keep the country safe."
Under the plans, so-called special advocates in civil courts would be able to examine secret documents in closed hearings.
Ministers would have to apply for the "closed measures proceedings" and, if opposed by the claimant's legal team, a final decision would be made by a High Court judge.
The green paper also includes a review of the future oversight of the security and intelligence services.
Mr Clarke told MPs the number of such cases was "steadily increasing", adding it was "becoming fashionable almost" to start challenging cases involving the security services in the courts.
Special advocates are already used in cases involving the security services which are heard by the Special Immigration Appeals Commission (Siac).