After months of legal wrangling, Britain's spy agencies chose to settle the lawsuit to avoid a pricey and prolonged court case in which open testimony from secret agents could have jeopardized national security, a British government official told The Associated Press on condition of anonymity Tuesday.
At least seven former detainees would receive payments and at least one man would receive more than one million pounds (US$1.6 million), according to a second source who has seen details of the weekend settlement and spoke on condition of anonymity because lawyers agreed that the details would be kept confidential.
British spies have not been accused of torturing detainees themselves, but former detainees have alleged that British officials violated international law by knowing about the abuse and doing nothing to stop it.
In interviews last week, former U.S. President George Bush boasted that he authorized some techniques - which others have labeled torture - for the interrogation of suspected terrorists, and that the methods yielded intelligence that saved lives.
Britain has long opposed some of the interrogation techniques that Bush administration officials authorized in the so-called war on terror after the Sept. 11 terrorist attacks in 2001.
Allegations of torture and abuse have been widespread among many Guantanamo detainees who were held in Afghanistan and other countries before being sent to the US prison camp in Cuba.
But the most detailed account of abuse came from former detainee Binyam Mohamed, who alleged that Britain was aware that the CIA sent him to be interrogated in Morocco, where his genitals were sliced with a scalpel.
Before he was returned to Britain from the U.S. prison camp, lawyers for Mohamed sued in the British courts for intelligence transcripts to prove Britain knew he was being abused and that any evidence U.S. officials had was tainted.
A British court ruled that Mohamed was subjected to "cruel, inhuman and degrading treatment" by U.S. authorities and ordered the release of a previously secret summary of CIA documents on the treatment of Mohamed.
Under long-standing conventions, nations don't disclose intelligence shared by their allies, and the court's ruling drove a wedge between U.S. and British intelligence officials. It also raised questions on the sanctity of intelligence sharing agreements if courts would be able to expose private exchanges in the future.
The payout now also raises the question of whether other detainees outside of Britain could look to the settlement as a way of pushing pending lawsuits forward even if the British government has made no admission of guilt.
"It does send out a very strong signal and it is going to cause difficulties with other countries, particularly the United States," said human rights lawyer Philippe Sands.
The case is thought to be one of the first bulk pay-outs to former Guantanamo detainees.
In a separate case, Canadian-Syrian engineer Maher Arar received an apology and $10 million (euro7.34 million; 6.25 million pounds) in compensation from the Canadian government after he was caught up in the "extraordinary rendition" of terrorist suspects.
Arar says he was mistaken for a terrorist when he was changing planes in New York on his way home to Canada, a year after the 2001 terrorist attacks. He was sent to Syria, where he claims he was tortured.
A Canadian inquiry cleared him of involvement in terrorism and concluded he had been tortured. But in June the U.S. Supreme Court quashed his bid to sue U.S. authorities over his treatment.
British diplomats and government officials had confirmed previously that negotiations were taking place with lawyers for 12 former detainees, all either British citizens or residents, who had begun legal action against the government.
High Court judge Stephen Silber also said in July that mediation talks were under way.
Government officials had estimated that the court cases could last 5 years and cost up to 50 million pounds ($80 million) in legal fees. Officials said about 100 intelligence officials had already been removed from regular duties to work on preparing up to 500,000 documents to be used in court.
The settlement paves the way for a planned independent inquiry which is due to examine how much the government knew about the treatment of detainees by allies.
Retired judge Peter Gibson will lead the investigation after police conclude criminal inquiries into the actions of two specific intelligence officers.
Police are investigating whether an officer with domestic spy agency MI5 is guilty of criminal wrongdoing over the alleged torture of an ex-Guantanamo Bay detainee. In a separate case, the actions of an officer with overseas intelligence service MI6 are also being investigated.
The government official who spoke to the AP on condition of anonymity on Tuesday said both agencies are confident they will be vindicated in the investigations.
Britain's government and intelligence agencies have repeatedly denied they were involved in, or condoned, the use of torture.
Associated Press writer David Stringer contributed to this report.