The Court of Appeal ruled by a majority that the bank had not been guilty of misfeasance in public office for failing to regulate BCCI, which left losses of $13bn worldwide following its collapse in 1991.
Misfeasance is 'improper performance of an act that is lawful in itself'.
Three Rivers lost more than£2 million in the BCCI scandal. Liquidators Deloitte & Touche have so far recovered£1.2m but it is still owed more than£800,000.
At the time the then Bury finance director Brian Smallridge said: 'We have not said they are crooks. But we have said they have not regulated the crooks properly' (LGC, 28 May 1993).