Companies from non-coalition countries that have failed to win lucrative reconstruction contracts from Iraq's Coalition Provisional Authority (CPA) could mount legal challenges against the US government - and some are already seeking advice from City firms - a high-powered conference on Iraq heard last week.

Matthew Happold, a law lecturer from the University of Nottingham, told the conference - organised by the British Institute of International and Comparative Law - that the US decision to procure reconstruction contracts only from US, Iraqi or coalition-based companies could constitute a breach of World Trade Organisation (WTO) impartiality obligations.

A challenge could be brought before its disputes panel, he said.

Meanwhile two top City solicitors - speaking on the basis that their names were unreported - told the meeting that many companies from non-coalition countries were taking advice on how to launch a challenge.

One said: 'They might wait until they can see what their options are, but if it becomes clear that they haven't got a part of the action, then they could move to challenge the US.'

The other added: 'There is a feeling it is not only those European countries which did not participate in the war - such as France, Germany and Russia - that are not receiving contracts, but that Britain is also being left out.'

Jeremy Fleming