Last year a judge said Metropolitan Police officers had falsely imprisoned and discriminated against the boy, and awarded him £28,250.
He was placed in handcuffs and leg restraints and put in a police van.
The Met appealed last month saying the ruling could affect operational effectiveness.
The Court of Appeal had been told it would lead to officers being advised to be “wary and defensive” when attending emergencies involving people with a disability or mental illness.
This is a major legal defeat for the Met Police and its desire to ensure officers should have a wide discretion over how they get things done.
The force had argued that operational decision-making in difficult situations may be damaged by this judgement. But the courts were having none of it.
Policing by consent, the bedrock of the British system, means officers must take into account all the available facts before acting.
In this case, that duty meant pausing to ask the right questions. There will still be times when officers will be able to justifiably restrain a vulnerable adult or child – the question will always be whether it was proportionate at the time.
But the sad thing about this case is that there was no emergency – just someone who needed time and space and the patience of others.
The case arose in 2008 after the boy, known in court as ZH, jumped full-clothed into Acton Baths, west London.
He was lifted out and put in handcuffs and leg restraints and held in the back of a police van before being handed over to carers.
He has severe autism and epilepsy and can react adversely if touched or approached by someone he does not know.
ZH won a High Court claim for trespass to the person, assault and battery and false imprisonment under the Disability Discrimination Act and the Human Rights Act, last March.
He sued through his father, GH, who told the High Court his son had changed since the incident from a “loveable little kid into an upset child” who did not want to bathe, shower or go into water.
Sir Robert Nelson, sitting in London, awarded damages and said although the officers were genuinely doing what they thought best, matters escalated to the point where there was a “wholly inappropriate” restraint of ZH.
Anne Studd QC, representing the police, told the appeal court Sir Robert had failed to understand “the bigger policing picture” and had failed to build in any operational discretion when officers genuinely believed they were in an emergency situation that required them to act at once.
Dismissing the appeal, Lord Dyson sitting with two other judges, said “nothing could justify the manner in which the police restrained ZH”.
Refused to apologise
The judge declared: “Operational discretion is not sacrosanct. It cannot be invoked by the police in order to give them immunity from liability for everything that they do.”
But he expressed “some sympathy” for the police, saying they were “intent on securing the best interests of everyone, not least ZH”.
ZH’s father said Met Police Commissioner Sir Bernard Hogan-Howe had refused to apologise to his son and refused to agree that officers should not shackle children with disabilities in similar circumstances.
“This makes me afraid for my son and others with disabilities,” he said.
“My family would much rather that the hundreds of thousands of pounds of public money used by the commissioner to fight this case had been used to train his police officers to humanely treat people with disabilities.”
A Met Police spokesman said the commissioner has “recognised that there are improvements to be made in how the Met Police respond to those in our communities suffering from mental health”.