Libyan politician Abdul Hakim Belhaj and his wife have won the latest round in their bid to win damages over their rendition to Tripoli.
In December last year, Mr Justice Simon ruled that their case against former foreign secretary Jack Straw and Sir Mark Allen, ex-head of counter-terrorism at MI6, should be struck out.
But, in July, lawyers for the couple told the Master of the Rolls Lord Dyson, Lord Justice Lloyd Jones and Lady Justice Sharp in the Court of Appeal that it was not beyond the jurisdiction of the High Court
Today, the judges said that the proceedings were not barred by state immunity and, although the act of state doctrine was engaged, the proceedings fell within a limitation to the doctrine on grounds of public policy applicable in cases of violation of international law and fundamental human rights.
The couple want compensation and declarations of illegality arising out of the UK's alleged participation in their abduction, detention and rendition in March 2004 and their alleged mistreatment.
Their claims are "stayed" pending the outcome of an appeal by the the defence to the Supreme Court.
Mr Belhaj, a leading figure in the rebel forces before Colonel Muammar Gaddafi was killed, claims that British intelligence was responsible for providing information that facilitated their rendition.
The case covers a period from when the couple were detained by Chinese authorities at Beijing airport for two days before being deported to Malaysia and held for two weeks, then flown to Thailand, ostensibly en route to London, and later taken to Libya on an aircraft said to be owned by a CIA front company.
Mr Belhaj says that, in Bangkok, they were detained by American intelligence and he was tortured while his pregnant wife was chained to a wall. When they got to Tripoli, he spent six years in jail and his wife was released shortly before giving birth.
Mr Justice Simon concluded "with hesitation" that the defendants were correct in saying that the case put forward against them depended on the court having to decide that the conduct of US officials acting outside the United States was unlawful, in circumstances where there were no clear and incontrovertible standards for doing so and where there was incontestable evidence that such an inquiry would be damaging to the national interest.
The Government was said to be liable on the principles of secondary liability by acquiescing, assisting, encouraging and conspiring in what happened.
There was no allegation against any UK official or that any detention or mistreatment took place in the UK or in UK-controlled territory, and it was not claimed that either claimant had any connection with the UK.
Sapna Malik from law firm Leigh Day, which represents Mr Belhaj and Fatima Boudchar, said later: "The Court of Appeal has rightly recognised that the gravity of the allegations raised by our clients makes it all the more compelling for the English courts to get on and deal with their case and to reject outright the attempts by Jack Straw, Mark Allen and the government defendants to shield their conduct from judicial scrutiny.
"Our clients are now a significant step closer to seeing justice done in their case."
Cori Crider, a director at Reprieve, which also represents the family, said: "The Government so fears this case going to trial that they have stalled for years by throwing up a parade of scarecrows - claiming, for example, that the United States would be angered if Mr and Mrs Belhaj had their day in Court in Britain.
"The Court was right: embarrassment is no reason to throw torture victims out of court. The Government's dubious and wasteful delay tactics in this case need to end. Enough is enough."
Abdul Hakim Belhaj said: "My wife and I are gratified by the judges' decision to give us our day in court. Our part of the 'deal in the desert' - the kidnap, the secret CIA jail, the torture chamber in Tripoli - is as fresh and as painful for us as if it happened yesterday."
In the Court of Appeal's ruling, Lord Dyson said: "The allegations in this case - although they are only allegations - are of particularly grave violations of human rights."
The "abhorrent" nature of torture and its condemnation by the community of nations was apparent from the participation of states in the UN Convention against Torture - to which all of the States concerned with the exception of Malaysia are parties - and the International Covenant on Civil and Political Rights - to which Libya, Thailand, the United States and the United Kingdom are parties - and from the recognition in customary international law of its prohibition.
"So far as unlawful rendition is concerned, this too must occupy a position high in the scale of grave violations of human rights and international law, involving as it does arbitrary deprivation of liberty and enforced disappearance."
The respondents in the proceedings were either current or former officers or officials of state in the United Kingdom or government departments or agencies and were not entitled to any immunity before the courts in this jurisdiction.
Furthermore, their conduct, considered in isolation, would not normally be exempt from investigation by the courts.
"On the contrary there is a compelling public interest in the investigation by the English courts of these very grave allegations. The only ground on which it could be contended that there is any exemption from the exercise of jurisdiction in the present case is because of the alleged involvement of other states and their officials in the conduct alleged.
"Notwithstanding our view that the present proceedings would entail an investigation of the legality of the conduct of those foreign officials, the fortuitous benefit the act of state doctrine might confer on the respondents is a further factor supporting the application of this public policy limitation.
He said it was not a case in which there was a lack of judicial or manageable standards.
"On the contrary, the applicable principles of international law and English law are clearly established. The court would not be in a judicial no man's land."
Lord Dyson went on: "The stark reality is that unless the English courts are able to exercise jurisdiction in this case, these very grave allegations against the executive will never be subjected to judicial investigation.
"The subject matter of these allegations is such that, these respondents, if sued in the courts of another state, are likely to be entitled to plead state immunity. Furthermore, there is, so far as we are aware, no alternative international forum with jurisdiction over these issues.
"As a result, these very grave allegations would go uninvestigated and the appellants would be left without any legal recourse or remedy.
He added that, notwithstanding evidence that there was a risk that damage would be done to the foreign relations and national security interests of the United Kingdom, he did not consider that in the particular circumstances of the case these considerations could outweigh the need for our courts to exercise jurisdiction.
"For the reasons set out above, we consider that there is a compelling case in favour of these proceedings being heard in this jurisdiction. In this particular context, the risk of displeasing our allies or offending other states, and even the risk of the consequences of varying severity which it is said are likely to follow, cannot justify our declining jurisdiction on grounds of act of state over what is a properly justiciable claim."