Northern Ireland’s most senior judges were urged on Tuesday to order compensation awards for two men whose convictions for terrorist offences were quashed after more than 30 years.

Joseph Fitzpatrick and Terence Shiels, who pleaded guilty as teenagers, want to overturn a High Court ruling that they are not entitled to payouts.

If their appeal is successful it could open the floodgates to a series of similar applications stretching back to the 1970s.

They launched legal action after being denied compensation, with their lawyers arguing that Justice Minister David Ford mistakenly decided no miscarriage of justice was established in their cases.

In November last year their judicial review applications were dismissed because there was no “new or newly discovered fact” that merited a payout.

But a panel of judges in the Court of Appeal, led by Lord Chief Justice Sir Declan Morgan, was told the issue was treated wrongly.

Karen Quinlivan QC, for both men, argued a fact may be newly discovered if it is revealed in court on appeal – even if a defendant may have known it all along.

Mr Fitzpatrick, 50, from the Markets area of Belfast, was jailed for five years for membership of Fianna na hÉireann – the IRA’s youth wing – and for an arson attack on a motor garage in February 1977.

He was also convicted of involvement in a gun attack on an army patrol the previous December following an alleged admission to acting as a scout for the Provisionals.

In a separate case, Mr Shiels, 49, from the Creggan in Londonderry, was held on suspicion of involvement in a shooting incident at the city’s Rosemount RUC station in March 1978.

He received a suspended jail sentence based on a written statement in which he too allegedly admitted being a member of the Fianna and possession of a handgun.

Both men were aged 16 when they were arrested and, under the Judges’ Rules which operated at the time, should have been allowed access to a solicitor and appropriate adult during interview.

Their convictions were overturned by the Court of Appeal in May 2009 after being referred by the Criminal Cases Review Commission.

With a breach of the Judges’ Rules established, and the only evidence being the teenagers’ admissions, the guilty verdicts were held to be unsafe.

Both men’s applications for compensation were then turned down by the Secretary of State.

Following a landmark Supreme Court ruling that Sinn Féin MLA Raymond McCartney and Derry journalist Eamonn MacDermott should receive compensation after having murder convictions quashed, the Department of Justice agreed to review its position in the Fitzpatrick and Shiels cases.

However, in December 2011 the refusal was reaffirmed because their convictions were not reversed due to any new or newly discovered fact showing beyond reasonable doubt a miscarriage of justice.

Claiming the High Court judge who dismissed the judicial review challenge misdirected himself, Ms Quinlivan said: “He was erroneous not to conclude that the decision-maker had erred in not accepting there were new or newly discovered facts in this case.”

The appeal continues.