The government has “subverted the rule of law and obstructed justice” by refusing to hold an inquiry into the 1989 murder of the Belfast solicitor Patrick Finucane, the supreme court has heard.

Finucane, who represented a number of high-profile republicans, was shot dead in front of his family by loyalist gunmen who forced their way into his Belfast home in an attack found to have involved state collusion.

The decision to hold a paper-based review of the killing rather than a public hearing had resulted in there being no effective scrutiny of one of the most notorious murders of the Troubles, Barry MacDonald QC told the UK’s highest court.

The challenge has been brought on behalf of Finucane’s widow, Geraldine, who has been seeking a public hearing for almost 30 years.

After Finucane’s death it emerged that the loyalist paramilitary intelligence officer responsible for directing Ulster Defence Association attacks, Brian Nelson, was an agent controlled by the British army’s Force Research Unit.

A senior police officer, John Stevens, conducted a series of investigations into the murder. In 2001, political agreement between the UK and Irish governments established that an international judge would investigate the Finucane killing, among others.

A report by the judge, Peter Cory, recommended there should be a public inquiry into the Finucane murder. In 2011, however, the coalition government decided that rather than holding a public inquiry it would set up an independent review by a high court judge, Sir Desmond de Silva.

MacDonald told the supreme court: “No one has been held accountable [for the murder].” He said the review about whether to hold a public inquiry or a paper-based review had been a sham.

The only person ever prosecuted was the getaway driver, after a conversation was recorded by the Panorama journalist John Ware.

MacDonald said: “Nelson was never prosecuted for the murder. Colonel J, the head of the Force Research Unit, misled the court about Nelson’s role, according to a senior civil servant.

“Far from being disciplined or prosecuted … Colonel J was formally honoured. Nelson’s direct army handler has never been questioned. She declined to cooperate with Lord Stevens and sent a sick note to Sir Desmond de Silva.

“None of those responsible for facilitating the murder or perverting the course of justice after the event has ever had to explain themselves in public.”

MacDonald said the decision to conduct a paper review meant government officials “have been insulated from further scrutiny”.

He added: “The army, police and security service officers responsible for facilitating the murder of a solicitor whose only ‘crime’ was to represent his clients effectively have all been guaranteed impunity.”

He said the question for the supreme court was whether the refusal to hold a public inquiry “could ever be regarded as compatible with either the rule of law or article 2 of the European convention on human rights [which guarantees the right to life].”

The murder was “exactly the kind of case where the court needs to interfere in a hard-edged way to discharge its constitutional obligations and to protect the rule of law, not to mention Mrs Finucane’s human rights,” he said.

“Where the executive has subverted the rule of law and obstructed justice, they should not expect the guarantors of law and justice to look the other way.”

Quoting earlier documents in the case, MacDonald said the police and the army were “above the law” and could “get away with murder”.

The hearing continues.