More than 100 Iraqi civilians on Tuesday won a landmark legal victory in their bid to force a public inquiry into allegations against British soldiers of “systematic” torture.

The government claims that the misconduct was confined to a “few bad apples” and denies allegations of “systematic” abuse.

Last year, the High Court turned down the demand for a separate inquiry on grounds that a panel was already looking into the wider issue of alleged ill-treatment by British soldiers. It also took into account two other inquiries into specific allegations of torture.

But on Tuesday three Appeal Court judges overruled the previous verdict and ordered the Ministry of Defence to reconsider the issue. They held that the existing inquiry panel, the Iraq Historic Allegations Team, lacked “practical independence” as its members included officers of the military police some of whom may themselves be accused of wrongdoing.

Allowing the appeal, Lord Justice Kay observed that the court was of the view that “the practical independence of IHAT is, at least as a matter of reasonable perception, substantially compromised”.

The judges also found that the other inquiries had failed to fully satisfy Article 3 of the European Convention on Human Rights, which provides protection against inhuman and degrading treatment. “It will be for the (Defence Secretary) to reconsider how the Article 3 obligation should now be satisfied,” Lord Justice Kay said.

The Ministry of Defence said it would examine the judgement “very carefully and consider next steps”.

“We note that the Court of Appeal has not ordered a public inquiry but has asked the defence secretary to reconsider how to meet the investigative obligations,” a spokesman said.

The Ministry must decide by November 30 whether to move the Supreme Court.

The case was brought by 128 Iraqis alleging torture, and inhuman and degrading treatment by British soldiers and interrogators in Iraq between March 2003 and December 2008.

Ali Zaki Mousa, the lead claimant from Basra, alleged that he suffered months of beatings and other forms of abuse in the custody of British soldiers between 2006 and 2007.

The lawyer for the claimants accused the MoD of “deploying every dirty trick in the book” to avoid accountability. But, after the court ruling “it has nowhere to hide”.

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