A London court on Thursday handed a partial victory to campaigners trying to halt British arms sales to Saudi Arabia over the kingdom's bombing campaign in Yemen.
The Court of Appeal ruling does not immediately halt UK arms sales or suspend existing licenses.
But judge Terence Etherton said the UK government "must reconsider the matter" and weigh up future risks.
The government had "made no concluded assessments of whether the Saudi-led coalition had committed violations of international humanitarian law in the past, during the Yemen conflict, and made no attempt to do so," Etherton ruled.
Prime Minister Theresa May's office said she was "disappointed that the court found against the government on one ground" and would seek an appeal.
Trade minister Liam Fox was expected to make a statement in parliament later in the day.
The UK-based Campaign Against Arms Trade (CAAT) non-profit first launched its court battle against the government in December 2015.
Thursday's judgement came in response to CAAT's appeal of a July 2017 High Court ruling that UK arms exports to the Gulf kingdom were "lawful".
Britain accounts for 23 percent of arms imports to Saudi Arabia and last year signed a multi-billion-pound preliminary order with Riyadh for 48 Eurofighter Typhoon fighter jets.
Government figures analysed by CAAT show that Britain has licensed nearly 5 billion pound (USD 6.4 billion, 5.6 billion euros) in weapons to the kingdom since the Saudi-led campaign began in 2015.
The London court judge stressed that Thursday's decision "does not mean that licences to export arms to Saudi Arabia must immediately be suspended". CAAT claimed a "historic" victory that should force the government to suspend military equipment sales to its close Middle East ally.
"This historic judgement means that the government must now stop issuing new arms exports licences, suspend existing licences, and retake all decisions to export arms to Saudi in accordance with the law," CAAT said in a statement posted on its website.
Tens of thousands of people have been killed in the Yemen conflict since the Saudi-led coalition intervention in 2015, relief agencies say, and the fighting has triggered what the UN describes as the world's worst humanitarian crisis.
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