North Convictions Overturn Upheld by Appeals Court : Iran-Contra: The full panel’s action is a major victory for the former White House aide and a setback for independent counsel Lawrence Walsh.

Iran-Contra defendant Oliver L. North won a major round in his continuing legal battle Tuesday as the full U.S. Circuit Court of Appeals here refused to re-examine a split ruling by three of its judges that had overturned North’s convictions on three counts.

In a companion ruling Tuesday, the original three-judge panel said that U.S. District Judge Gerhard A. Gesell had “denied the defendant a hearing to which the Constitution entitled him” on whether North’s immunized testimony before Congress had helped convict him.

The ruling represents a major setback for independent counsel Lawrence E. Walsh, who was appointed to prosecute criminal offenses arising from the sale of arms to Iran and the diversion of proceeds to Nicaragua’s Contra rebels during the Ronald Reagan Administration.

North, a former National Security Council aide who coordinated many of the Iran-Contra activities, testified at congressional hearings about his role in return for a guarantee that his statements would not be used against him in later criminal proceedings.

In May, 1989, a jury convicted North on three counts. But last July, the appeals panel set aside two convictions--aiding and abetting the obstruction of Congress and accepting an illegal gratuity--pending a hearing on whether his congressional testimony was used against him.

His conviction on a third count--altering or destroying National Security Council documents--was thrown out altogether on grounds that Gesell had given erroneous instructions to the trial jury.

Walsh, citing the importance of the questions involved, said that he would “in all probability” appeal Tuesday’s ruling to the Supreme Court.

It is uncertain, however, whether the high court will agree to hear the appeal. If it does, arguments on the case would not likely occur until the next court term beginning in October, 1991.

If Walsh fails to obtain a Supreme Court review, he would have to submit to a “line-by-line . . . witness-by-witness” hearing by Gesell on whether North’s televised congressional testimony influenced his grand jury indictment or subsequent conviction.

In Tuesday’s companion ruling, Judges Laurence H. Silberman and David Sentelle--both Reagan appointees--noted that Walsh had warned Congress that granting immunity “would create serious--and perhaps insurmountable--barriers” to later prosecution.

“The decision as to whether the national interest justifies that institutional cost in the enforcement of the criminal laws is, of course, a political one to be made by Congress,” the two judges said. “Once made, however, that cost cannot be paid in the coin of a defendant’s constitutional rights.

“That is simply not the way our system works. The political needs of the majority, or Congress, or the President never, never, never, should trump an individual’s explicit constitutional protections,” Silberman and Sentelle said.

Chief Judge Patricia Wald again dissented, contending that her two colleagues “have rendered impossible in virtually all cases the prosecution of persons whose immunized testimony is of such national significance as to be the subject of congressional hearings and media coverage.”

Wald, named to the court by former President Jimmy Carter, said that she favors rehearing the case because “the significance of these issues for the prosecution of future government scandals and for the effective functioning of separation of powers is too great. . . .”

North has completed three-fourths of the 1,200 hours of community service to which Gesell sentenced him. The judge stayed North’s fine of $150,000 until his appeal is decided.

In declining to hear the case, the 12-member court did not disclose how each member had voted.