The High Court today quashed the decision of the Serious Fraud Office to drop an investigation into deals between BAE and Saudi Arabia, and gave the SFO permission to appeal to the House of Lords.
Earlier this month, it ruled in favour of anti-bribery campaigners who claimed that the SFO should have continued its probe into alleged illegal payments to members of the Saudi royal family.
Lord Justice Moses and Mr Justice Sullivan said that the SFO "unlawfully submitted" to "blatant threats" from the Saudis.
The Government argued the inquiry put anti-terrorism co-operation with the Saudis under threat.
Dinah Rose QC, for Corner House Research and the Campaign Against Arms Trade (CAAT), told the judges today that both sides agreed that the matter should go directly to the Lords.
She added: "There is agreement between the parties that the right belief is that the decision of the director of the Serious Fraud Office should be quashed and the matter remitted for reconsideration.
"The effect of that is that the inquiry is reopened unless or until a valid decision brings it to an end."
Lord Justice Moses said that all the costs of the appeal to the Lords should be paid by the Government.
"We think that as a result of the efforts of the two claimants, an important fact has emerged, which has never previously seen the light of day, namely the specific access given to Number 10 Downing Street and the threat issued there - 'drop it or else' - and it's that fact which has given rise to the important public issue which needs to be determined, namely 'what is the lawful response when such a threat is issued?'.
"We do not think that it is right that, in any respect, the claimants should bear the burden of having to litigate that, which they would have to even under a protective costs order.
"We think this is a paradigm case for everyone having to bear the costs of litigating this issue, which relates to the way this country is governed and basic constitutional principles and, in those circumstances, we shall make an order that the appeal should be on terms that the respondent does not seek to disturb the order of costs in this court and should bear the reasonable costs of the appeal, win, lose or draw."