MI5 and its director-general have avoided legal action after the Security Service "fell badly short" by providing false evidence to three courts.
Senior judges at the High Court said it "would not be in the public interest" for the court to initiate contempt of court proceedings over the agency's failures.
The incorrect evidence was used in a successful bid for an injunction against the BBC in 2022.
The ruling prevented it from airing a documentary naming a man known as X who has allegedly abused two women and is a covert human intelligence source (CHIS).
MI5 maintained the information was accurate for three years but later admitted it was wrong.
In a statement after Tuesday's ruling, director-general Sir Ken McCallum said the judgment "underlines MI5's serious failures in this case", adding: "In this instance the agency I lead fell badly short."
In July, the Deputy Investigatory Powers Commissioner, Sir John Goldring, found "serious and systemic failings" by MI5 and that one officer, known only as Officer 2, lied about his role in the incident.
A hearing in September was told MI5 and individuals including Sir Ken and Officer 2 should face contempt of court proceedings.
Lawyers for one of the women allegedly abused by X claimed there were "repeated efforts to prevent the truth emerging".
However, Lady Chief Justice Baroness Carr, sitting with Dame Victoria Sharp and Mr Justice Chamberlain, said proceedings at this stage would be "unlikely to do more than duplicate" the findings of Sir John's report.
Explaining the ruling, Baroness Carr said there was no public interest in further action against Sir Ken and that the only possible sanctions against MI5 would be financial.
"There could be no public interest in imposing a financial penalty whose only effect would be to deprive MI5 of funds it requires to undertake its important work," she said.
The judges said proceedings against individual officers would be "highly resource-intensive" and would "face some substantive hurdles, which may or may not be overcome".
The injunction, which remains in force, allowed the BBC to air a documentary which alleged X was a misogynistic neo-Nazi who attacked his then-girlfriend with a machete, but prevented the corporation from identifying him.
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In a witness statement for the injunction proceedings, MI5 falsely claimed it had maintained its policy of neither confirming nor denying (NCND) to the BBC whether X is a CHIS.
This evidence was also given to a specialist tribunal which investigates allegations against the UK intelligence services, where MI5 was defending a legal claim from X's former girlfriend, known as "Beth", over X's alleged abuse of her.
However, the BBC later told MI5 it had recorded a 2020 conversation with Officer 2, who confirmed X was a CHIS.
While MI5 undertook internal investigations into the incident, the same three judges said in July last year that these had "major deficiencies" which left them "unable to have the requisite degree of confidence in the conclusions reached".
Officer 2 resigned from MI5 last year, while Beth settled her claim against MI5 in March, with the service making no admission of liability.
(c) Sky News 2026: MI5 escapes legal action despite providing false evidence to three courts

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