The US Court of Military Commission Review struck down the March 2007 conviction of David Hicks -- who took part in an attack on Indian forces -- in a unanimous ruling that reverses what had been one of the government's few successes in prosecuting prisoners at Guantanamo.
Attorney Wells Dixon said he immediately called Hicks' attorney in Australia, where it was the middle of the night, to pass on the news to his client.
Hicks, 39, pleaded guilty to providing material support to terrorism. It was a plea bargain in which all but nine months of his seven-year sentence was suspended and he was allowed to return home by the end of that year.
In 2014, an appeal's court ruled that material support was not a legally viable war crime for the special wartime court at Guantanamo known as a military commission.
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Prosecutors argued his conviction should still stand because he agreed not to appeal as part of the plea deal, an argument rejected by the US Court of Military Commission Review.
For Hicks, the decision is the end of an odyssey that began when he traveled to Pakistan in 2000, joined the militant group Lashkar-e-Taiba and took part in an attack on Indian forces, according to court records.
He later traveled to Afghanistan and attended a training camp run by al-Qaida. His only real fighting experience was helping to guard a Taliban tank near the Kandahar airport.
He was captured by the Northern Alliance, turned over to US forces and spent about five years at Guantanamo. Dixon said today's decision is "confirmation that he is actually innocent" of any crime.