July 7 (Bloomberg) -- A U.K. prosecutor decided to drop a bribery investigation into weapons contracts between Saudi Arabia and BAE Systems Plc to protect British lives, not jobs, government lawyers told the U.K.'s highest court today.

Robert Wardle, former director of the Serious Fraud Office, always took the view that he couldn't pull the investigation for economic reasons, Jonathan Sumption QC, lawyer for the agency, told the House of Lords in London today.

When he was informed of the potential threat to British national security, Wardle decided he ``had no choice'' other than to stop the probe, Sumption said. The SFO investigates and prosecutes the biggest and most complex fraud cases in the U.K.

The government is appealing an April ruling by London's High Court that directed the SFO to reconsider its decision to drop the probe. Wardle halted the investigation in December 2006 when he was told that Saudi Arabia planned to stop cooperating with the U.K. on intelligence and security issues if the probe continued, Sumption said.

``The information supplied to him satisfied him that U.K. national security would be seriously damaged by the continued investigation,'' said Sumption.

The two advocacy groups opposed to the arms trade that started the court action, Campaign Against Arms Trade and Corner House, claim Wardle didn't take into account a treaty obligation by Britain to prosecute corruption cases.

`Other Steps'

David Pannick QC, a lawyer for the two groups, said today that Wardle hasn't proved there was an ``absolute necessity'' to stop the investigation.

``There were other steps available to the United Kingdom that were not fully exploited,'' he said. He will finish his presentation to the House of Lords tomorrow.

The groups he represents brought a so-called ``judicial review'' of the decision last year. Judicial reviews examine the decision-making process used by government agencies. If the court finds against a public body, it can be ordered to reconsider the decision. The agency is allowed to draw the same conclusion provided all procedures are correctly followed.

Campaign Against Arms Trade and Corner House alleged at hearings in February that the SFO dropped the case after Saudi officials threatened to cancel orders for fighter jets and end cooperation on intelligence gathering. BAE won a 4.43 billion- pound ($8.7 billon) deal for 72 warplanes after the investigation was called off.

Sumption said today that while it would be against international law for the U.K. to drop a bribery probe to preserve a contract or preserve relations with another country, the U.K. was permitted to do so for national security reasons.

To contact the reporter on this story: James Lumley in London at jlumley1@bloomberg.net.

Last Updated: July 7, 2008 11:44 EDT