THE controversy over journalists refusing to name their sources of information moved to a new level this week, with two courts indicating that new factors had to be taken into account.

Despite the Government's failure to deliver on its promise to reform the law on contempt of court, following the case against Ms Susan O'Keeffe in 1994, it appears we are moving towards a legal interpretation of balancing rights the journalist's right to protect sources of confidential information, the public interest and the proper administration of justice.

Britain reformed its contempt of court legislation in 1981 and allowed a so called "test of necessity", in which the court would ask if it was necessary for the question as to sources to be asked and if the information could be obtained by other avenues.

In the Republic, journalists can still be asked to name sources and can be imprisoned if they refuse to answer, of course, would be journalistic suicide.

Two journalists have been sentenced for refusing to name sources Joseph Dennigan of the Irish Press in 1933 and RTE's Kevin O'Kelly, who refused to answer a question in the Special Criminal Court in 1972.

The O'Kelly case has remained the deciding one. He was imprisoned even though the case was successfully concluded without Mr O'Kelly having to identify the voice on a tape, the question he refused to answer. Because the case went ahead the judge commuted his sentence to a fine.

This week Barry O'Kelly (32)(no relation), a Sir reporter, was in court. His refusal to name his sources in a civil action in which he is a witness looked like going the same way as his namesake's nearly 25 years ago.

Counsel for the Attorney General, however, indicated just how far the Attorney General believes the law has evolved since 1972. Counsel indicated that the court should exhaust other methods and ask if it is necessary to question Mr O'Kelly.

Legal sources believe the Attorney General does not want the question of Mr O'Kelly's possible contempt to go to the Supreme Court.

It is hoped that Judge James Carroll will be able to conclude the case without posing the question to Mr O'Kelly again.

In the Belfast case, a businessman, Senator Edward Haughey, applied for a court order to compel Phoenix magazine to reveal the sources of information in an article about him. Dr Haughey's lawyers said there was a strong inference that the information was obtained from documents relating to a 1988 libel action against the Sunday World.

The action failed in the High Court. Mr Justice Sheil applied Section 10 of the Contempt of Court Act 1981, under which no one responsible for a publication can be ordered to disclose the source of information unless it is considered necessary in the interests of justice, national security or prevention of disorder or crime.

The judgment was hardly significant in itself, but what was significant is the case of Goodwin v the UK that hovered over both the Belfast and the Dublin courts.

The case against Phoenix is the first such case since the European Court of Human Rights ruled in favour of Bill Goodwin, who had been fined £5,000 for refusing to reveal his sources of information. His case was taken to the House of Lords and then to the European Court by the National Union of Journalists. It argued that the fine imposed violated his rights of free expression under Article 10 of the European Convention of Human Rights.

An English court had found Mr Goodwin in contempt because revealing his sources was considered necessary in the interests of justice. It is clear from Mr Justice Sheil's judgment, that UK judges will now have to impose a liberal interpretation of the 1981 Act for fear of forcing legislation under the terms of the Goodwin judgment to bring the convention into British law.

In Dublin Mr O'Kelly's barrister argued that either Irish law had evolved since the original O'Kelly case, or else it was in serious breach of the European Convention.

Events are pushing ahead faster than politicians have been able or willing to keep up. The Goodwin judgment, and other judgments on freedom of expression and journalists' rights, have pushed the legal establishment to reconsider the blanket denial of any privilege for

If Judge James Carroll does not find it necessary to asked Mr O'Kelly to reveal his sources again, the case could be settled with a view expressed and a test of necessity should be applied.

If, however, Mr O'Kelly is asked again, and the case goes to the Supreme Court, then it will be argued that Ireland is in breach of the European Convention, to which the State is a signatory, as its laws are even less sophisticated than Britain's, which have been found in breach by the European Court.

The test of necessity is the most the establishment now believes it can retain.