Lord Saville outlined the expected procedure of the interviews and hearings that will look into the incident of January 30, 1972, when 14 unarmed Catholic civilians were shot dead by British soldiers in the Northern Ireland city of Londonderry.
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The tragedy came to be known as Bloody Sunday and the naming of the inquiry as the "Bloody Sunday Inquiry" is being viewed as having huge significance.
It is seen as a symbolic move to detach the new investigation from the Lord Widgery inquiry which took place soon after the killings. He found that the soldiers had been shot at first and that the people killed had been marching illegally.
But that report has been widely condemned over the last 26 years for being inconsistent and lacking the testimony of eyewitnesses, many of whom were never called to give evidence.
A long campaign by relatives and survivors, backed by the Irish Government, resulted in the British Prime Minister Tony Blair agreeing to a fresh enquiry on the eve of the anniversary of the killings earlier this year.
During the launch of his investigation on Friday, Lord Saville underlined the impartiality of his panel from any government agenda and its determination to find out what happened.
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However, he said the new inquiry has not been set up to look into the Lord Widgery report.
He said: "Our task is to try and find out what took place in this city that Sunday afternoon. It seems to us that we cannot simply try to reconstruct events as they occurred on the streets that day without paying proper regard to what led up to those events.
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"Thus we shall be looking at the background to Bloody Sunday to the extent necessary to enable us to reach as informed a conclusion as possible."
The former Bishop of Derry the Right Reverend Edward Daly, who was on the streets of Londonderry on Bloody Sunday helping the dying and injured has given the inquiry a cautious welcome.
"I was encouraged by the opening statement," he said.
Lord Saville
Lord Saville will be joined by Sir Edward Summers, a former judge in New Zealand's appeal court, and Mr Justice William Hoyt, the Chief Justice in New Brunswick, Canada.
A survey of High Court judges in 1991 found Lord Saville of Newdigate to be one of those judges whose rulings were least likely to be overturned.
He followed a 1985 appointment as judge of the High Court by becoming a Lord Justice of Appeal in 1994 and then a Law Lord in 1997.
Lord Saville chaired a Committee of the Department of Trade and Industry which led to the Arbitration Act 1996 and currently chairs the Lord Chancellor's Advisory Committee on Legal Education and Conduct.
A well as a respected judge, Lord Saville also appears to be a moderniser. He was also once chair of a committee that encouraged judges to become familiar with technology by using laptop computers and e-mail to communicate with each other.
In 1997 he was one of the three appeal judges who issued the first Court of Appeal ruling on the Internet, which he said would speed up the justice process.