Decision due on plea to lift contempt order so Wang Yam, who is serving life for killing Alan Chappelow, can take case to ECHR

It is, according to the estate agents, "probably the most valuable plot of land with planning permission to come to the market for sale in Hampstead Village … ever". The Regency-style house now being constructed will provide, behind its electric gates, a cinema, swimming pool and gymnasium and the future owner of this £7m property will be living, we learn, where Constable, and Keats, too, found inspiration.

What the estate agents do not mention is that on this very plot more than seven years ago a murder took place with links to the British government, Chairman Mao and George Bernard Shaw. A killing which was then followed by the first murder trial in Britain in which most of the evidence was heard in secret with the media barred from entering the court.

Now an appeal to the European court of human rights (ECHR) could finally throw a light on the mystery of Downshire Hill.

In June 2006 the body of Allan Chappelow, a reclusive and wealthy retired journalist and author, was found buried beneath a enormous pile of book proofs in his home, No 9 Downshire Hill, close to Hampstead Heath.

Police had gone to the house after being alerted by his bank, HSBC, in the wake of suspicious transactions and his failure to respond to their inquiries. He had been battered to death. Wax found on his body suggested that he might have been tortured.

Allan Chappelow. Photograph: Metropolitan police/PA

For years Chappelow, who had worked as a photographer for the Daily Mail and Daily Telegraph, and written books on Shaw, had declined to let anyone enter his house, with the exception of a trusted handyman.

The house was crumbling, the garden wildly overgrown. Detectives found few clues. Unidentified fingerprints could have been Chappelow's; his body was so decomposed it was impossible to take prints from it. There were a few footprints and cigarette ends.

Nearby lived Wang Yam, a Chinese dissident, whose grandfather had been Mao's third in command, while his father had been a Red Army general. Wang had been a research assistant in the Chinese nuclear weapons research institute from 1984 to 1987 and an associate professor at a university in Beijing. He claimed to have been involved in the demonstrations in Tiananmen Square and, supposedly fearful of reprisals, left the country and went, via Hong Kong, to London, where he was very swiftly granted refugee status in 1992.

He worked initially as a researcher at Imperial College and ran his own computer company, Quantum Electronics Corporation, from 1997 till it folded in 1999.

Wang Yam shared a rented house with his girlfriend, Hui Dong. At the time of the murder, he was deeply in debt and being evicted from his flat because of rent arrears.

He came to the attention of the police investigating the murder because, prior to and just after the death of Chappelow, use of the stolen credit cards had been traced to him. Wang had recently left the country for Switzerland where he was arrested in Zug. He was charged with murder, burglary and receiving.

A court sketch of Wang Yam at his first trial in 2008. He was convicted of theft and fraud offences, but the jury could not agree on the murder charge. Photograph: Julia Quenzler

The crown's case was essentially that Wang had stolen mail in order to get access to the victim's accounts, and, quite possibly, had been caught in the act by Chappelow, whom he had then beaten to death.

Much of the trial at the Old Bailey was held in camera, after Jacqui Smith, then home secretary, agreed to requests for secrecy on grounds of national security and "to protect witnesses". Media organisations, including the Guardian, challenged a demand unprecedented in modern times – that witnesses at a forthcoming murder trial should be heard in secret for reasons of national security.

"There have been plenty of trials in the past in which issues have been raised about national security material. It is extremely rare for such cases to be heard in camera," Gavin Millar QC told the trial judge, Mr Justice Ouseley.

He referred to previous cases when allegations about the intelligence agencies had been made in court.

Asked by the judge whether the prosecution would have to drop the case if it did not get a secrecy order, Mark Ellison QC, for the prosecution, replied: "There is a serious possibility the crown may not proceed in this case."

The media were rebuffed and warned not even to speculate as to why the secrecy order was made, and for this reason we are still unable to report the defence case at the trial.

Apart from the clear evidence that Wang had been involved in using the victim's credit card, the other plank of the case against him was that a local postman had seen someone answering his description near the house and that this person had asked about the mail due to be delivered to Chappelow. The postman told this person, who the prosecution alleged must have been Wang, that mail could not be delivered because of foliage in the way of the letterbox; he returned the next day to find the foliage cleared.

In a first trial, in 2008, for which the jury all had to receive security clearance, Wang was convicted of the theft and fraud offences and jailed for four and a half years, but the jury could not agree on the murder charge.

At a second trial he was convicted and jailed for life in 2009 with a recommendation that he serve a minimum of 20 years. He is now in Whitemoor prison, in Cambridgeshire, from where he has contacted the Guardian to protest his innocence.

In his letters, which have also been sent to senior government figures, Wang claims that he had become involved with a criminal gang and that gangsters had been responsible for giving him the stolen cards and cheques. He claims he was unaware of Chappelow's murder at the time he was handling the stolen cards.

Wang's background was confirmed in court by Philip Baker QC, an OBE who was awarded his honour for his work with Chinese political refugees.

He gave evidence for Wang in one of the open sessions of the trial. An appeal against the murder conviction was turned down in 2010. His legal team is now trying to take his case to the ECHR, which led them to court in December to challenge the gagging order.

In a letter from prison, Wang writes: "I believe the only way to my freedom is [to] let public … know what is my defence and what I had done in full picture. No cover-up … I was convicted for murder without even police have evidence that I know the deceased or ever met each other. There is no evidence to link me with the deceased, even police burnt the crime scene by accident and there are unknown DNA fingerprint footprint, all not belong to me."

Wang's case to the ECHR is based on the grounds that he did not have a fair trial because it was not held openly. At the hearing last month in the Royal Courts of Justice, Wang's barrister, Kirsty Brimelow QC, argued that the government was attempting to restrict his access to the ECHR by objecting to in-camera material being presented, even if that material would also be heard in camera. "His right to put his case fully is restricted," she said.

There was reference in court to similar cases of "high sensitivity" and references to CIA complicity in the rendition from Poland of Abd al-Rahim al-Nashiri now held at Guantánamo Bay. It was agreed that "reference to gangsters and the names of those gangsters is not at issue".

The judge said: "The names of the gangsters and what he said they did is material that is perfectly usable by the applicant."

For the crown, James Eadie QC said "the order was made to protect the public interest and the interests of justice … There would be a serious risk of harm in the disclosure of this information".

Mr Justice Ouseley, who reserved judgment, said that "what went on in camera should stay in camera". He noted the presence of a representative of the criminal cases review commission now looking at the case.

Whatever the merits of Wang's defence, a new hearing would answer an important question: was the secrecy request made for genuine reasons of national security or to avoid embarrassment?

• This article was amended on 3 March 2014 to remove a reference to Wang Lijun which described him as former company secretary of the Quantum Electronics Company and an associate of Bo Xilai, who was jailed for corruption offences in China last year. Lijun Wang, who was the company secretary, has asked us to make clear that he has never been an associate of Bo Xilai.