Mr Hamilton's reputation is not the only one at stake

ike Mr Tony Blair, I prefer to complete unfinished business. Happily, I do not have to kill hundreds of innocent civilians. Accordingly I am leaving the war in Yugoslovia, which will still be going on next week, next month and the month after that, to return to the action for libel which Mr Neil Hamilton is pursuing against Mr Mohamed Al Fayed.

Mr Hamilton is suing Mr Fayed for saying, in a Channel 4 Dispatches programme in January 1997, that he had accepted cash from him for asking questions in the House. Mr Hamilton admits asking the questions but denies taking the money - though he admits he and his wife enjoyed a free holiday in the Paris hotel owned by Mr Fayed.

In October 1994 the Guardian published a story whose principal source was Mr Fayed. It said that he (through the lobbying firm Ian Greer Associates) had paid money to Mr Hamilton and to Mr Tim Smith. Mr Smith was by then a junior minister at the Northern Ireland Office; Mr Hamilton was one at the DTI. Mr Smith admitted taking the money, some pounds 25,000, and promptly resigned. Mr Hamilton did not admit taking it but was required to resign none the less for having misled Mr Michael Heseltine and others about his relationship with Mr Greer.

Still, Mr Hamilton and Mr Greer began libel proceedings against the Guardian. In July 1995 Mr Justice May stopped the action. He accepted the paper's argument that to try it properly would breach parliamentary privilege. This argument derived from article 9 of the Bill of Rights 1689, which went:

"That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament."

It is worth noting that the learned judge accepted the Guardian's argument before the Parliamentary Commissioner for Standards, Sir Gordon Downey, and the Committee on Standards and Privileges, interested themselves in the matter. We shall come to their intervention later on.

When the judge made his initial ruling against Mr Hamilton and Mr Greer, some of us felt it was not entirely fair. We thought the mere examination of Mr Hamilton's parliamentary record, which the paper's counsel would necessarily have to undertake, had nothing to do with the article of the Bill of Rights that was being relied on. It was solely concerned with protecting the freedom of speech of MPs. It did not prohibit all discussion in the courts of what had gone on in Parliament.

Several Conservative members agreed, perhaps less because of their constitutional views than because they thought Mr Hamilton had not been treated entirely justly. Lord Hoffmann, who was not a Conservative, was prevailed upon to add a clause to the Defamation Bill 1996 which was then going through Parliament. The new section provides:

"Where the conduct of a person ... in relation to proceedings in Parliament is in issue in defamation proceedings, he may waive for the purpose of those proceedings, so far as concerns him, the protection of any enactment or rule of law which prevents proceedings in Parliament being impeached or questioned in any court ... out of Parliament."

There are two things wrong with this provision. First, it accepts Mr Justice May's erroneously wide interpretation of the Bill of Rights. And, second - and connectedly - it restricts access to the escape-hatch to those who are or have been themselves members of Parliament. Mr Hamilton, however (who did not lose his seat until May 1997), did not avail himself of this newly created privilege. The action against the Guardian collapsed because he fell out with Mr Greer and perhaps for other reasons as well.

Madam Speaker then referred the allegations against him to the Committee on Standards and Privileges, who asked Sir Gordon to investigate. In July 1997 he concluded that the evidence that Mr Hamilton had received cash payments directly from Mr Fayed was "compelling". He went on to write - without the slightest evidence, as far as I can see - that "the amount received by him is unknown but is unlikely to have been less than the total amount received by Mr Smith".

In November 1997 the committee reported that they were "satisfied" that the commissioner had "carried out a thorough inquiry". However, they could not "arrive at a practicable way of reaching a judgment which adds to or subtracts from the commissioner's findings". Later that month the committee's report was debated and approved by the Commons.

In 1998 Mr Fayed tried to stop Mr Hamilton from taking action against him. In July Mr Justice Popplewell held he could carry on suing. In so deciding he criticised both the method of inquiry by Sir Gordon and the tentative endorsement of his conclusions by the committee.

Mr Fayed then appealed to the Court of Appeal under the Master of the Rolls, Lord Woolf. His fellow- appellant was Madam Speaker herself, who instructed the Attorney-General, who in turn ordered the Solicitor-General, Mr Ross Cranston, to turn up in court. Mr Cranston did not appear as amicus curiae - a friend of the court or disinterested adviser - but, rather, as an advocate in the same cause as Mr Fayed's. He likewise wanted the proceedings stopped. He seemed most concerned about Mr Justice Popplewell's animadversions on the procedures adopted by the commissioner and the committee.

Last month the Court of Appeal went out of its way to emphasise that it intended no disrespect to Parliament. Indeed, Lord Woolf seemed at times to be confusing the legislative sovereignty of the Queen in Parliament with the rights, powers and privileges of the Commons - a very different matter.

But Lord Woolf was clear (and the other two judges agreed with him) that the Bill of Rights prohibited only the penalising by the courts of any MP, or any person taking part in proceedings in Parliament, for anything said in Parliament. It also prohibited "direct criticism by the courts of anything said or done in the course of parliamentary proceedings". He could have added that the courts would not investigate alleged breaches of parliamentary procedure either - such as that the tellers had counted an important vote wrongly. On the same principle, the Lord Chief Justice, Lord Bingham, quashed the conviction of Ms Fiona Jones for breaking electoral law but left the question of her readmission to the House to the Speaker.

Lord Woolf even went so far as to say that a court should decline to hear Mr Hamilton's claim if it was persuaded that a result which was inconsistent with the commissioner's conclusions would undermine the authority of Parliament. This seems to me to go unnecessarily far down the road of judicial fawning. But there was no need to worry. A victory for Mr Hamilton over Mr Fayed would, Lord Woolf concluded, have no such unhappy consequences for the dignity of our legislators.

He and his colleagues refused leave to appeal to the House of Lords, which I have always thought pointless, because Mr Fayed (or whoever) can always appeal against the court's decision to the appellate committee of the Lords. In the meantime, I look forward to an exciting and instructive libel case. Mr Fayed can be compelled to give evidence, and so can his employees, past and present. Well done, Lord Woolf!