The Federal Court has ordered the unions watchdog to quash its investigation into the Australian Workers Union and return all documents it seized during controversial federal police raids in 2017.

Federal Court Justice Mordecai Bromberg issued an order on Tuesday quashing the Registered Organisations Commission (ROC) decision to investigate the AWU in October 2017. The ROC has also been ordered to return all documents it seized during the police raids of AWU offices.

AFP officers removed shredded documents and other evidence from the AWU offices in Sydney in 2017. Credit:Wolter Peeters

The ROC said it will appeal the decision.

"The effect of the orders made are that the documents seized under the search warrants will remain in the custody of the Australian Federal Police pending an appeal that the ROC intends to make to the Full Federal Court," a ROC statement said. "The ROC will not make any further comment on the matter at this time."