Lady Justice Hallet described the system of dealing with 'On The Runs' as a "messy compromise".
She painted a picture of an unprecedented, flawed system.
There was a lack of strategy and structure, she said, but not a breach of the law.
Only those suspects against whom there was insufficient evidence to prosecute should have been given "letters of comfort," she said, but police and prosecutors made independent decisions in a system that seemed to have no framework.
John Downey, suspected of the Hyde Park bombing, should not have received a letter, she said. The error was the fault of the Police Service of Nothern Ireland, who spotted it in 2008 but did nothing to rectify it.
Lady Justice Hallett confirmed there are two other cases where letters were sent out in error in a scheme which was kept quiet but not deliberately obscured.
It is unclear what now happens to those suspects who received letters of comfort but it is thought unlikely that they will be rescinded.