Grant Thornton (GT) has become embroiled in the legal action being taken by property tycoons Vincent and Robert Tchenguiz against the Serious Fraud Office (SFO) over the failed investigation into their dealings with collapsed Icelandic bank Kaupthing.

The Tchenguiz brothers are currently pursuing a £300m legal case for damages, after an earlier High Court ruling that the SFO obtained arrest warrants unlawfully and acted unfairly when it searched their premises as part of its inquiry. The pair say the publicity surrounding their arrest damaged their business and reputations.

On Friday judge Henry Bernard Eder ruled that Grant Thornton must release reports it prepared on the Tchenguiz brothers which were used by the SFO as part of the basis for seeking the arrest warrants.

Lawyers for Stephen Akers, a partner at GT, and Mark McDonald, a director, who together acted as liquidators for Kaupthing, argued that the reports should not be disclosed because they were subject to legal privilege. However, the judge said it was 'necessary and appropriate' to grant disclosure of the reports.

Akers and MacDonald said they will appeal against the decision, according to a report in the Guardian, which it says could open the way for separate legal action against them in a claim that could exceed £2.5bn.

In a statement, Vincent Tchenguiz described the ruling as a 'crucial and immensely significant judgment' but did not comment on any potential legal action against GT. GT has not made a comment so far.