While the court's decision does not mean Britain must immediately halt arms exports, it does mean there is a stay on the granting of next arms export licences to Saudi Arabia, Britain's richest Arab ally.
The British government broke the law by allowing arms exports to Saudi Arabia that might have been used in the conflict in Yemen, a British court ruled on Thursday.
While the court's decision does not mean Britain must immediately halt arms exports, it does mean that there is a stay on the granting of next arms export licences to Saudi Arabia, Britain's richest Arab ally.
"The Court of Appeal has concluded that the process of decision-making by the government was wrong in law in one significant respect," judge Terence Etherton said as he handed down the ruling.
He added that the government made "no concluded assessments of whether the Saudi-led coalition had committed violations of international humanitarian law in the past, during the Yemen conflict."
London will have to reconsider the way it handles such export licences to Saudi Arabia.
"The decision of the court today does not mean that licences to export arms to Saudi Arabia must immediately be suspended," he said.
"It does mean that the UK government must reconsider the matter, must make the necessary assessments about past episodes of concern, allowing for the fact that, in some cases, it will not be possible to reach a conclusion."
The case was brought by the Campaign Against the Arms Trade against the British government.
"The Saudi Arabian regime is one of the most brutal and repressive in the world, yet, for decades, it has been the largest buyer of UK-made arms," said Andrew Smith from the Campaign Against Arms Trade. "The arms sales must stop immediately."
Rosa Curling, the solicitor of law firm Leigh Day which acted for the campaigners, said the government will now have to reconsider whether to suspend existing export licences and reconsider its decision to continue to grant licences.