LONDON - Millions of pounds worth of criminal assets, including luxury homes and jewellery, will remain out of the reach of the British state after a landmark ruling by the Appeal Court.

The wife of a convicted drug smuggler successfully argued in court it was illegal for authorities to confiscate her share of the couple's wealth.

Britain's law enforcement and prosecuting agencies, including Customs and the Serious Organised Crime Agency, are studying the implications of the ruling, which leaves them powerless to confiscate criminal proceeds from a spouse who has not been convicted of any offence where property is jointly owned.

Three Court of Appeal judges said there was no "legal principle or public policy" that permitted Revenue and Customs to deprive Marion Gibson of half her share of £5,430,671 ($14,033,637) which the courts had ruled was the value of criminal proceeds her husband must pay back to the state.

Gene Gibson, 48, from Warrington, was jailed in 1999 for 25 years and given a confiscation order for conspiracy to import cocaine. At confiscation proceedings brought by the Revenue and Customs Prosecution Office in 2000, it was estimated he had made more than £38 million drug trafficking.

His wife instructed lawyers to fight the confiscation order on the grounds that she would be made "destitute" if forced to sell the family home.

The Court of Appeal held last week that Marion Gibson's half interest in the home she shared with her husband and their children, plus other financial instruments, could not be confiscated.

Criminal law experts warned last night that the ruling gave the green light to crime bosses to protect their wealth by sharing it with their wives. Rodney Warren, director of the Criminal Law Solicitors Association, said the authorities "would now be at a distinct disadvantage" in enforcing confiscation orders.

- INDEPENDENT