A panel of three judges of Pakistan's Supreme Court ordered on Thursday the release of Ahmed Omar Saeed Sheikh, an Islamist accused of beheading US journalist Daniel Pearl, a government lawyer said.
"By a majority of two to one, they have acquitted all the accused persons and ordered their release," a provincial attorney general, Salman Talibuddin, told Reuters in a text message.
The court also dismissed an appeal of Ahmad Saeed Omar Sheikh's acquittal by Pearl's family and the Pakistani government.
The three-judge Supreme Court ruled 2 to 1 in favor of upholding Sheikh's acquittal and ordered him released, said Siddiqi.
Sheikh, the main suspect in the 2002 kidnapping and murder of Pearl, a Wall Street Journal reporter, had received the death penalty.
"Today's decision is a complete travesty of justice and the release of these killers puts in danger journalists everywhere and the people of Pakistan," the Pearl family said in a statement released by their lawyer, Faisal Siddiqi.
Washington previously said it would demand Sheikh be extradited to the United States to be tried there. There was no immediate reaction from the US Embassy to the court order upholding the appeal.
"We urge the US government to take all necessary actions under the law to correct this injustice. We also hope that the Pakistani authorities will take all necessary steps to rectify this travesty of justice," the Pearl family said.
According to AP news, Sheikh was convicted of helping lure Pearl to a meeting in the southern Pakistani port city of Karachi, during which he was kidnapped. Pearl had been investigating the link between Pakistani militants and Richard C Reid, dubbed the "Shoe Bomber" after trying to blow up a flight from Paris to Miami with explosives hidden in his shoes.
Pearl disappeared January 23 while investigating militant links to the so-called shoe bomber. His body was discovered in a shallow grave soon after a gruesome video of his beheading was delivered to the US consulate in Karachi.