A federal appeals court on Tuesday overturned the conviction of Salim Ahmed Hamdan, a former driver and bodyguard for Osama bin Laden, DPA reported.
The three-judge appeals court in Washington, DC threw out the 2008 conviction of Hamdan, who was found guilty of providing material support for terrorism and sentenced to five and a half years in prison by a military commission.
In overturning the conviction, the court found that the charge of material support for terrorism did not exist as a war crime at the time Hamdan committed the acts in question, Human Rights Watch said in a news release.
The verdict was a setback for the military prosecutors who won his conviction at a military commission trial at the US naval base at Guantanamo Bay, Cuba in 2008.
"The court rightly ruled that a war crimes commission can't convict someone for an act that wasn't a war crime when it was committed," said Kenneth Roth, executive director at Human Rights Watch.
Hamdan, who was captured in Afghanistan in 2001, also had been charged with conspiracy, but was acquitted on that charge. His conviction on the material support charges had been upheld by the appeals court created for the military commissions. By the time Hamdan was convicted in 2008 he already had been in detention longer than his sentence and was released to Yemen, his home country.
He is the only 9-11 defendant convicted by trial in the military commissions system at Guantanamo. Five agreed to plea bargains and one detainee was prosecuted, but as a form of protest refused to defend himself, Human Rights Watch said.
Hamdan challenged his detention and won a landmark Supreme Court case in 2006 that found the military commission system for prosecuting war crimes unconstitutional. As a result Congress rewrote the rules, leading to Mr Hamdan's trial and conviction in 2008.
The same rules are being used to conduct pretrial hearings taking place this week at Guantanamo for five other men suspected in the planning of the September 11, 2001 terrorist attacks on the US.