Confidence in the inquiry would be shattered if it was decided to hold a hearing in camera or withhold important documents from disclosure, a barrister warned yesterday.
Mr Brian Kennedy, on behalf of two men wounded by paratroopers, argued against applications by British ministers for the non-disclosure of alleged secret material.
Mr David Lloyd-Jones QC, on behalf of a large number of soldiers who were on duty in Derry, also submitted that there were compelling considerations in favour of disclosure.
He said allegations of criminal conduct had been made against some soldiers. The inquiry's conclusions could influence any subsequent decision to prosecute. The Home Secretary and the Defence Secretary have separately sought Public Interest Immunity (PII) on intelligence material.
Mr Seamus Treacy QC, for a number of next-of-kin, invoked article 2 of the European Human Rights Convention to support the families' right to hear all the material. He submitted that "it is difficult to see how a proper inquiry . . . could take place if the state itself and its agents were entitled to suppress . . . information which would be relevant to that investigation".
Mr Treacy said Mr Martin McGuinness of Sinn Fein should be entitled to full disclosure of allegations made against him by British agents or informers. He said allegations, made by an IRA informer codenamed Infliction and the agent codenamed Observer B, were of crucial significance. This material would no doubt be relied upon by some to indicate the IRA was preparing for Bloody Sunday - hence the allegation (by Observer B) he saw men drilling in the Bogside.
The suggestion was also made that the first shot was fired by Mr McGuinness. If Mr McGuinness came to be interviewed by the inquiry's solicitors, Mr Treacy asked, could it seriously be suggested it would be fair to interview him without making the allegations available to him.
Submissions will continue today.