Previously suppressed court papers released to the Guardian by the court of appeal provide an extraordinary insight into the way in which senior Saudi princes supposedly conduct their business.

The breakdown in commercial relations between Prince Mishal, a former defence minister, his son Prince Abdulaziz and their Jordanian former business partner, Faisal Almhairat, have degenerated into a barrage of accusations and counter accusations that will eventually have to be settled by judges in London.

The most wounding claims are contained in a petition submitted by Almhairat, who fled his native Jordan "in fear of his life" and has since been living in London. His documents claim that, at one stage, he sought the help of Scotland Yard's anti-kidnap squad.

Almhairat maintains that key conversations on which he relies were recorded on his iPhone and then downloaded on to memory sticks which were subsequently stolen in the UK. The Saudis say they never existed. They also dismiss the allegations as fabrications designed to blackmail them into settling the case on disadvantageous terms.

Almhairat's first allegation relates to a transaction said to have taken place in spring 2010, when he was asked to fly from the Jordanian capital Amman to Beirut to issue a bank guarantee for $5m to an intermediary who supposedly dealt with Hezbollah, the Shia political organisation which controls much of eastern Lebanon.

Almhairat claims he declined to become involved but then received a phone call from Prince Abdulaziz during which he was told: "We deal with whoever we want to deal with, whether it's Hezbollah, the mafia or even the Jews. The important thing is that you implement any given order without questioning.

"Even your King [of Jordan] does not raise a question … You agreed to obey us and in return you get our protection. Yet, be sure that if we remove our protection, you and all your family are dead within a second … Do as you are instructed. Otherwise your head will be at my feet without your body." Almhairat claims he was later told the banker's draft was to be used to "facilitate money-laundering for Hezbollah", allowing Prince Abdulaziz to earn a profit of $5m.

Almhairat's second main allegation relates to a charter flight said to have been paid for by Fi Call in late February/March 2011 from Nairobi to Amman. It was supposedly arranged on Prince Abdulaziz's instructions. The purpose, Almhairat was told, was to transport the prince's camping equipment. Almhairat, however, said that documents he obtained revealed certificates purporting to show that a mining company had been given permission in the Democratic Republic of the Congo to export "5,000kg of ore nuggets worth $140m, plus another export of 5,000kg ore nuggets, 4,000kg of ruby gemstones, 3,000kg of green garnet, 7,000kg of malakis stone and 1,000kg of blue sapphire".

Almhairat sent an email saying he wanted nothing to do with the business. He says he later saw an email saying the goods had been taken from Kenyan customs to the local United Nations office where officials had supposedly scanned some of the boxes, seen dollars and decided to ask for money in return for looking the other way. The value of the shipment was said to be "2B", implying two billion, possibly in dollars.

In April 2011, Almhairat met Prince Abdulaziz and his father, Prince Mishal, in Dubai. Mishal is alleged to have told him: "When we enter a business we always have majority control of the company. We need to have majority control of the shares in Fi Call. You can keep a small percentage of the company as an incentive for you."

Mishal supposedly added: "You know that I have moved huge amounts of money for people like the Mubaraks. We've been doing this business for years. We can move money for anyone, including the Iranians, because no one dares challenge us … Help my son and you'll get our protection."Throughout the preliminary hearings lawyers for Prince Mishal and Prince Abdulaziz, as well as Global Torch – the British Virgin Island company they are said to control – dismissed the allegations as false, "scandalous and outrageous". The aim was to cause "reputational damage, embarrassment and distress".

The allegations should "not be aired in open court" because the allegations are "wholly false", it was insisted. "Publicity for the [Beirut ] allegation", it was said, would result in Prince Abdulaziz and Emad Ayshih, a director of Fi Call Ltd, being at risk of "serious personal injury or death from reprisals from citizens of Saudi Arabia or certain organisations".

Mark Warby QC, for the Saudi princes, said the allegations against the Saudi princes were "very grave" and were an attack on their reputations and their rights to a private and family life under article 8 of the European convention on human rights. In the Saudi submissions, put before the court first of all, they alleged that Almhairat misappropriated money from a joint account. They maintain he gave away intellectual property rights to telecommunications material without permission, failed to attend board meetings and effectively shut down the company without permission. Almhairat's lawyers deny the allegations.

On the Beirut transaction, the Saudis insist the money was merely being prepared to pay a subsidiary for telecommunications work. The $5m never left the bank, it is said. On the Kenyan aircraft charter, the Saudis insist that the emails which Almhairat refers to about precious stones are fictitious and malicious.

Publication of allegations of money-laundering links between two senior Saudi princes and Hezbollah are likely to prove deeply embarassing to the conservative kingdom, a sworn foe of Iran and Syria, Hezbollah's main backers. Over the past two years King Abdullah of Saudi Arabia has emerged as one of the principal supporters of the Syrian rebels seeking to overthrow President Bashar al-Assad. Hezbollah is blacklisted as a terrorist group in the US and its military wing is banned by the UK, and it is now fighting openly in support of the Assad regime. Abdullah has also been a staunch supporter of Sunni-led governments in Lebanon, where Hezbollah forms a part of the current coalition.

They are also likely to fuel the resentment of Saudis who believe that members of the royal family are corrupt, at a time when the kingdom has largely escaped the mass protests seen elsewhere in the region.