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A High Court judge in London ruled against the veterans, many of whom suffer from post-traumatic stress disorder, and who had accused the defence ministry of failing to adequately care for them.
Nearly 2,000 potential claimants registered an interest at the start of the trial in March 2002, but the hearing centred on 15 "lead" cases.
"War and warlike operations inevitably take their toll, both physical and psychological," Judge John Owen said after dismissing 11 of the cases in a 710-page ruling.
Owen said he was "satisfied" that the defence ministry was in breach of its duty of care to four of the claimants, but such cases turned on their own facts and did not "demonstrate a systemic failure."
Had the veterans been successful in their suit, the total damage payout could have exceeded 100 million pounds (164 million dollars, 140 million euros).
The defence ministry argued that the disorder was not officially recognised until the late 1980s and said the treatment the soldiers received was in line with the best practice at the time.
"We are very disappointed by these findings," said the veterans' lawyers in a statement released after the ruling.
"The clear implication is that the onus was on the individual to make known their own suffering, even where they were untrained and ignorant of the nature and cause of their problems."
The parties are now expected to return to court on July 16 to discuss issues of costs and a possible appeal.
Claimants alleged that they were not prepared to face the terrifying experiences of war or other conflicts and that the defence ministry failed to deal with the predictable psychological or psychiatric consequences of such exposure.
"I wish to stress to the court that we for the claimants are not suing the MOD (ministry of defence) for exposure to war," lawyer Stephen Irwin said during the trial.
"War is what soldiers should expect and it is what they sign up for, it is what they join the army for and why sailors join the navy," Irwin said.
"It is also what their masters (the MOD) should expect and they should provide for this exposure to the horrors of war. In a sentence we say they did not," Irwin said.
"They didn't do it systematically and so far as they had a system it did not work properly to protect and care for soldiers, sailors and airmen in the forces," he said.
It was alleged that the majority of those affected by trauma were discharged without even recognition of their complaints, let alone treatment.
Post-traumatic stress disorder is also known as shell-shock or battle fatigue and can affect anyone who has suffered major psychological trauma, including an assault, child abuse or a severe accident.
Irwin's graphic illustrations, during the trial, of the trauma suffered by servicemen included that of a 19-year-old man from the north of England who was sent to Bosnia in the 1990s.
The man walked into a village where, breathing in smoke and fearful of cross-fire, he saw a pregnant woman tied to a post with her belly ripped open and a dead dog stuffed into the cavity.
Latest figures show that 264 veterans of the 1982 Falklands war have committed suicide since the conflict, compared with the 255 who died in active service.
WAR.WIRE |