Allegations that British soldiers killed 20 unarmed civilians and abused others detained after a battle with Shia insurgents north of Basra in 2004 – the most serious allegations made against British soldiers in Iraq – are the subject of a public inquiry that opens on Monday.

The al-Sweady inquiry – named after the family of Hamid, an alleged victim aged 19 – was forced on the Ministry of Defence in 2009 after high court judges accused it of "lamentable" behaviour and "serious breaches" of its duty of candour.

The judges said the MoD had failed to disclose crucial information relating to the allegations and to set up a proper investigation as required by the Human Rights Act.

Nine Iraqis say they were tortured after being taken to a detention centre at Shaibah base near Basra and held there for four months. They say they were taken, along with the 20 murdered Iraqis, to a British base, Camp Abu Naji, after a fierce firefight in what became known as the battle of Danny Boy, a British military checkpoint near Majar al-Kabir, on 14 May 2004.

The soldiers and MoD strongly reject the allegations. The Iraqi families and their lawyers accuse the troops of meting out "truly shocking" treatment to civilians.

Interrogations by British military personnel involved "young men of 18, 19, and 20, some seriously injured with gunshot wounds, being stripped naked, forced to stand, not given appropriate medical treatment, and threatened with violence whilst still under the shock of capture in the middle of the night", Patrick Connor QC, counsel for the Iraqis, told a pre-inquiry hearing last year.

The scale of the task facing the head of the inquiry, Sir Thayne Forbes, a retired high court judge, is reflected in the number of witnesses who will give evidence. They include 15 Iraqis who have been granted visas to testify before the inquiry in London. 45 other Iraqis will give evidence from the British embassy in Beirut.

Jonathan Acton Davis QC has said witnesses include an Iraqi who "was working at the local hospital on 14 May 2004 and travelled to Danny Boy in an ambulance whilst the battle was taking place".

About 200 British military witnesses will also give evidence, Cecilia French, secretary to the inquiry, has said. Inquiry investigators have identified more than 1,000 potential witnesses, some of whom have provided written statements. The inquiry has obtained more than 90 statements from Iraqis interviewed in Beirut and Istanbul.

The inquiry is still waiting to receive written evidence from the MoD, including emails relating to the incident. Some emails are known to concern a visit by the International Committee of the Red Cross (ICRC) to the British detention centre at Shaibah in southern Iraq. The MoD is reported to have suppressed concerns expressed by the ICRC about the injuries they saw on the Iraqi detainees.

Colonel Dudley Giles was a key MoD witness in a military police investigation that dismissed claims that British soldiers mutilated and murdered civilians in Iraq, the high court was told in hearings that led to this public inquiry. A review by Greater Manchester police later concluded the investigation failed to collect forensic evidence and ignored key Iraqi witnesses.

The inquiry had been told the MoD was still searching for evidence held by its Iraq historic allegations team (IHAT). It has invested in a computer system, called the forensic data handling capability, which the inquiry has been told was "likely to be the largest storage computer currently in operation in the United Kingdom". It will be able to hold 110 terabytes of data.

Preparing the inquiry has cost £15.4m so far. It hopes to have completed its work by the end of 2014, French said.