The United Kingdom's highest court today provided new details of how the Saudis pressured British Prime Minister Tony Blair's government to shut down a politically embarrassing bribery investigation two years ago that implicated the Saudi ambassador to Washington. The ruling, by a House of Lords judicial panel, offers an unusually revealing window into how international power politics is played in the post-9/11 era.

The five-member panel recounts how Blair, faced with Saudi threats to cut off cooperation on counterterrorism operations, personally intervened to scuttle a criminal investigation into billions of dollars in allegedly improper payments made by British Aerospace Systems (BAE) to obtain Saudi contracts.

But the former prime minister, the court found, acted out of good faith: he and his advisers were genuinely worried that, if the Saudis followed through on their threats, it could lead to another "7/7"—British shorthand for the devastating July 7, 2005, terrorist bombings in the London subway system that killed 52 commuters and injured 700.

"The threats to national and international security [are] very grave indeed and ... British lives on British streets would be at risk," the British ambassador to Riyadh warned the Serious Fraud Office, the British unit conducting the probe, according to the court ruling.

Today's decision overrules a lower-court finding that Serious Fraud Office officials had improperly closed the investigation under pressure from Blair and thus effectively ends any chance that the SFO will pursue the BAE bribery allegations. (In a statement, the SFO said it will pursue other allegations against BAE not related to the Saudis. A spokesman for BAE denied wrongdoing but declined comment on the ruling.) The ruling was therefore a vindication of sorts for Blair and his top advisers, as well as a key victory for the Saudis and Prince Bandar bin Sultan, the former Saudi ambassador to the United States who was allegedly the prime recipient of the improper payments by BAE—even if the confirmation of their strong-arm tactics are not likely to win them any new friends in London or Washington.

Bandar, a longtime close personal friend of the Bush family who is now national-security adviser to Saudi King Abdullah, was so worried about investigations into the BAE payments that last year he hired the international legal and security firm Freeh Group International, headed by former FBI director Louis Freeh, to defend him from the charges. Among the Freeh Group's partners is Sir Stephen Mitchell, a prominent British barrister and former High Court judge. In addition, Bandar has hired William Bradford Reynolds, a former top official in the Reagan Justice Department, to represent him in a private shareholder lawsuit relating to the alleged improper payments.

Today's ruling is not likely to end the controversy over the BAE payments, however. The U.S. Justice Department is conducting its own investigation into whether BAE, which operates widely in the United States and has a growing portfolio of Pentagon contracts, violated the Foreign Corrupt Practices Act in making payments to Bandar and other Saudi officials.

The ruling is also likely to fuel criticism that the Saudi government—which portrays itself as a key ally of the United States and Great Britain in the War on Terror—is far less cooperative than it publicly claims. "This shows how the Saudis can get foreign governments to disregard their own justice system," said Ali Al-Ahmed, the director of the Gulf Institute, a Washington-based think tank that is critical of the Saudi government. "Terrorism is being used to blackmail the West. You watch, it is only a matter of time before they do this in the U.S."