The UK's top court has supported The Wall Street Journal Europe in its appeal of a defamation case in a landmark ruling that will henceforth enable the media in the United Kingdom to defend against libel actions by claiming that stories were in the public interest and involved serious and responsible journalism.

The ruling by the five Law Lords that sit in the House of Lords is viewed as setting a new standard for UK libel trials by providing journalistic organisations operating in the UK with protection more akin to that available to the media under the First Amendment of the US Constitution.

Until today's ruling, UK libel laws in common with similar laws in Ireland, had been viewed as the most friendly to plaintiffs.

The Law Lords accepted The Wall Street Journal Europe's argument that a story written in the public interest and handled responsibly in the cause of serious investigative journalism is a valid defense in a defamation action. "We need more such serious journalism in this country and our defamation law should encourage rather than discourage it," wrote Baroness Hale, one of the Law Lords, in her opinion.

The story at the centre of the case was published in both The Wall Street Journal Europe and its sister paper, The Wall Street Journal in the US, in 2002. It reported that Saudi authorities at the behest of US law-enforcement agencies were monitoring bank accounts of prominent Saudi individuals and companies that may, wittingly or unwittingly, have been used to finance terrorism.

A billionaire Saudi car dealer, Mohammed Jameel, brought a libel case against The Wall Street Journal Europe, claiming that he had been defamed because his company had been named in the story as a prominent Saudi enterprise whose accounts were being monitored.

The purpose of the story, the Journal said before the House of Lords, was to show that Saudi Arabia was cooperating in the international effort to combat terrorism. The paper argued that its inclusion of several prominent Saudi companies was designed to show how serious the Saudi authorities were. The newspaper didn't seek to defend the truth of the story, arguing that its sources in Riyadh were afraid of reprisals from Saudi authorities if they testified and that it couldn't identify a confidential source at the US Treasury Department in Washington who confirmed the Saudi information.

A jury in the original case ruled against the newspaper and damages of £40,000 (€59,000; $74,000) were awarded to Jameel and a Saudi company controlled by his family.

In Wednesday's ruling, the Law Lords found that the trial judge had misdirected the jury and applied the wrong legal standard, and entered judgment in favour of The Wall Street Journal Europe. The decision was unanimous.

Today's Lords' decision is a landmark one as it recast a 2001 libel decision known as Reynolds vs. Times Newspapers Ltd. in which former Irish Taoiseach (Prime Minister) had taken a case for libel against the newspaper, relating to a story focussing on the circumstances of his resignation. The 2001 ruling was intended to protect serious investigative journalism on matters of public concern. The Lords' opinion suggested that the previous decision had to date had little impact on the way libel law was applied and therefore needed to be restated.

The Law Lords also said it didn't matter that a judge, with "leisure and hindsight," might have made different editorial decisions than those made quickly in newsrooms. Rather, "the question in each case is whether the defendant behaved fairly and responsibly in gathering and publishing the information," the decision read. If journalists and editors behave fairly and responsibly, and the information is of public importance, the fact that it contains relevant but defamatory allegations against prominent people won't permit them to recover libel damages, they ruled.