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With a backdrop of tales of corruption and murky collusion in the Caribbean, two former senior British police officers are set to confront each other in a courtroom battle that could shed new light on a Scotland Yard team's controversial investigation in one of the world's largest tax havens.

The former head of the Cayman Islands' police force is suing for wrongful dismissal after he was sacked four years ago during an inquiry into an alleged illegal break-in at a newspaper office. The search was part of a local leak inquiry over claims of improper links between police and press on the British overseas territory. But after Scotland Yard was called to the islands in 2007, the case spiralled into a multimillion-pound inquiry that reached the top ranks of the local judiciary.

The affair resulted in a clearout of the top ranks of the islands' police force, the wrongful arrest of a senior judge who was later awarded more than 1m damages, embarrassment for the Met and professional disgrace for a British lawyer called in to advise the investigation.

The inquiry codenamed Operation Tempura and overseen by former assistant commissioner John Yates, who later quit the Yard over the phone hacking scandal was halted in 2009 without any successful prosecutions and with the Scotland Yard team dispatched from the Caymans.

But the controversy is set to be reignited with a legal battle that could feature documents that the Foreign Office has refused to make public because of fears it could damage the islands' multi-billion-pound offshore finance industry.

The sacked police chief, Stuart Kernohan, is due to appear at a mediation hearing in June in London to try to reach a deal over his claim against the Attorney-General of the islands, as well as the man who led the Scotland Yard probe, former Detective Chief Superintendent Martin Bridger.

If the case is not resolved, it will go to the Grand Court of the Caymans where details of potentially embarrassing private meetings between senior police and British-appointed officials are likely to be aired. "This is typical of this whole case," one of the lawyers closely involved in the case told The Independent. "Someone has made a complete and utter cock-up and unless people start disclosing documents we won't find out who it was."

The saga soured relations between Britain and the Caymans and comes amid new turmoil in the tax haven. The Independent reported last month that a Conservative peer, Lord Blencathra, faces investigation over lobbying work on behalf of the islands. The islands' Premier is at the centre of three police inquiries, including two into financial irregularities, according to reports from the Cayman Islands. William McKeeva Bush denies the claims.

"The continual rumours of investigations... are reminiscent of, and consistent with, the Operation Tempura fiasco and other attempts over the years," he said in a statement reported last week. "It is now obvious to the Premier that there are certain civil servants in the Foreign and Commonwealth Office...who continue to apply the policies of the former UK Labour Government with a view to destabilising the Cayman Islands."

Operation Tempura started in 2007 following claims that a senior police officer was passing confidential information to a newspaper proprietor. Mr Kernohan, with a force of only a few hundred officers, asked for Scotland Yard's help. Martin Bridger, a veteran of anti-corruption investigations, was sent and began a secret inquiry.

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Cayman Islands: The Met's Caribbean connection