The Investigatory Powers Tribunal is behaving more and more like a real court. It rightly refused what was seen as a pretty desperate plea by GCHQ at a hearing last month not to undermine the intelligence services’ cherished “neither-confirm-nor-deny” (NCND) policy. But the IPT also took care to preserve national security by not allowing suspected terrorists to find out whether they are under surveillance – the eavesdropping centre’s nightmare scenario, as I described it last month.

The case concerned legally privileged material: exchanges between lawyers and their clients relating to legal advice. In February, MI5, MI6 and GCHQ conceded that their regime for intercepting such material was unlawful because it did not meet human rights standards. The concession was made in connection with compensation claims brought against the government by two former Libyan dissidents, Abdel Hakim Belhaj and Sami al Saadi, together with their respective families – eight individuals in all. So the next question for the IPT was a factual one: had the claimants’ legally privileged communications in fact been intercepted?

The tribunal never tells a claimant whether he or she has been the subject of lawful interception. A finding of “no determination” means either that there was no interception or that any interception was lawful. The IPT made no determination in favour of seven of the individual claimants. But it did make a determination in favour of Saadi.

MI6 building in Vauxhall, London: Richard Stein, the claimants’ lawyer, said all clients in cases involving the security services should consider lodging a complaint in the tribunal. Photograph: Tim Ireland/PA

The tribunal told Saadi that GCHQ held two documents containing material in which he owned legal professional privilege. However, the documents “did not disclose nor refer to any legal advice”. Moreover, the privileged information had not been not used by the intelligence services or the government in connection with Saadi’s claim that he had been abducted with the help of MI6 and secretly flown to Tripoli, to be tortured by Muammar Gaddafi’s security police. That claim was settled in 2012, when the government paid Saadi and his family compensation of £2.2m without admitting liability. Belhaj’s claim continues.

Even if the legally privileged information had been disclosed to the government it would not have been any help to the defence, the IPT added. No compensation was awarded by the IPT because no harm had been done. However, in a symbolic move that calls to mind the Guardian’s enforced destruction of computers containing documents leaked by the NSA-whistleblower Edward Snowden, GCHQ was required to delete or destroy the parts of the documents they held containing privileged information.

Crucially, though, the IPT refused to order GCHQ to hand the documents over to Saadi. That might have helped him find out how his information had been intercepted. More to the point, it might “enable a person who is legitimately subject to surveillance or interception to take measures to make such surveillance or interception more difficult to achieve in the future”.

In its written judgment, the court recalled that it had been asked by James Eadie QC, counsel for the intelligence services, to declare that “no determination” could cover unlawful interception – and not merely, as now, lawful interception or no interception. “That level of ambiguity would place the validity of all the decisions of this tribunal in doubt,” the tribunal declared.

In its judgment, delivered by Mr Justice Burton and four other members, the IPT said:

The tribunal has been entrusted with the task of investigating complaints, to a large extent in closed proceedings, and without divulging details which might place security at risk. It would, in the tribunal’s judgment, undermine public confidence that parliament had created a means of holding the relevant public agencies to account if the tribunal’s findings of unlawful conduct by the intelligence agencies could be concealed on the basis of a non-specific submission of a risk to public safety.

The IPT explained that, in cases where disclosure could have very damaging effects on the ability of the intelligence services to protect the public, the NCND policy justified limiting the information that would be disclosed. But if a determination by the IPT “discloses that there has been interference with a complainant’s [human] rights, that is a consequence of such contravention, and in our judgment cannot be avoided”.

The government published new draft codes of conduct for consultation in February. These provide increased safeguards that apply when the intelligence agencies are handling legally privileged or journalistic material. The consultation period closed a few days before parliament was dissolved but, as the IPT noted in its judgment, a final version of the new code has not yet been put before parliament.

GCHQ are likely to be relieved that the IPT found there had been no use of privileged information in respect of Belhaj or Saadi. But Richard Stein of Leigh Day, the solicitor who represented the claimants and their families, together with lawyers from the campaign group Reprieve, said he was sure that the unlawful behaviour that that had been uncovered in this case was merely the tip of the iceberg. “All lawyers and their clients dealing with cases involving MI5, MI6 and GCHQ should consider whether to lodge a complaint in the tribunal to protect their privileged communications,” Stein added.