Two journalists inappropriately arrested over material that appeared in a documentary on a loyalist gun attack during the Troubles have settled their case against the Police Service of Northern Ireland.

It is understood the PSNI has agreed to pay damages to Trevor Birney and Barry McCaffrey and delete material it seized when officers raided their homes and offices in August 2018.

The settlement was announced during a brief hearing at Belfast High Court this morning.

Mr McCaffrey and Mr Birney were arrested over the alleged theft of a police watchdog document that appeared in their film No Stone Unturned about the Loughinisland massacre.

Last year, judges ruled search warrants used by police to search the journalists' home and their offices at Fine Point Films been "inappropriate".

This resulted in the criminal probe into the journalists being discontinued.

The original police operation had been undertaken by Durham Constabulary at the request of the PSNI amid conflict of interest concerns. 

It is understood that the PSNI has agreed to pay out £875,000 (€978,000).

The total includes £600,000 to Fine Point Films, £150,000 to Mr Birney and £125,000 to Mr McCaffrey.

In July, PSNI Chief Constable Simon Byrne issued an unreserved apology to the two journalists. 

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Reacting to the settlement, Mr Birney said: "Today marks an end to the legal process I began in a police cell on August 31 2018 after being arrested and my home and offices raided by dozens of PSNI and Durham police.

"We launched a Judicial Review in the face of the PSNI's most egregious attack on journalism to protect our journalism, our sources, and press freedom itself."

He added: "Over the past two years, the PSNI fought our attempts to protect our journalism and sources every step of the way.

"They sought to defend their indefensible attack on press freedom right up until the judgment delivered by the Lord Chief Justice in July this year.

"We have welcomed the current Chief Constable's apology for the actions of the PSNI. No such apology has been received by his predecessor George Hamilton, under whose leadership the PSNI arrested us.

"Journalists in this jurisdiction now need to see Simon Byrne take all steps necessary to ensure accountability for the PSNI's despicable attack on press freedom and to assure the press that lessons have been learned." 

Mr McCaffrey said "it's a relief that it's finally over" but questioned why it had taken the PSNI so long to settle the case. 

"This whole thing has cost the State millions. Millions of pounds wasted for what? This could have been spent on Covid and people in hospitals, but somebody within the PSNI decided that public money, millions of pounds of public money, was going to be wasted. Who's going to be held to account?

"I support policing, we support proper policing, but this was the dark arts. This was the dark forces. This was an attack on press freedom. And as far as we can see, those people have been allowed to escape.

"The Lord Chief Justice vindicated us. He cleared our names and we're very happy about that but the people that did this to us and that attacked the Fourth Estate and press freedom they have been allowed to escape.

"We think that the Policing Board should investigate this."

Northern Ireland's Lord Chief Justice Declan Morgan welcomed the fact that a settlement had been reached between the parties.

"We congratulate the parties on finding an answer to this interesting and difficult, but also important case," he told lawyers in Belfast High Court. 

A PSNI spokesman said: "The Police Service of Northern Ireland is pleased that these matters have now been

Amnesty International, which supported the journalists' campaign, said the settlement represented a victory for press freedom. 

Patrick Corrigan from the organisation said the Policing Board should investigate the episode so lessons could be learned.