A Libyan court has found Rachid Hamdani, one of two Swiss businessmen whose convictions for breaking immigration rules have strained ties between Libya and Switzerland, not guilty on charges of violating business rules, his lawyer said on Sunday.

'He is free to leave Libya if there is no appeal,' lawyer Salah Zahaf told reporters.   

The cases of Hamdi, who works for a construction company, and Max Goeldi have unsettled some of the foreign investors who flocked to Libya after the oil producer emerged from international isolation.   

A Libyan judge on Saturday fined Goeldi, the head of Libyan operations for Swiss-Swedish engineering firm ABB 1000 dinars ($800) on the same charge. Lawyers were considering an appeal.

Both of them have already been convicted on separate charges of violating Libya's immigration rules and sentenced to 16 months in prison. Amnesty International said their convictions did not meet international standards for a fair trial.

The two men have been staying inside the Swiss embassy in Tripoli, where the Libyan authorities have no jurisdiction.   

The two were barred from leaving Libya in July 2008 after Swiss prosecutors briefly arrested Hannibal Gaddafi, a son of Libyan leader Muammar Gaddafi, on charges of mistreating two domestic employees during a visit to Switzerland.

The charges were later dropped but Libya cut oil supplies to Switzerland and withdrew more than $5 billion in assets from Swiss banks. Libyan officials deny any connection between the arrest in Switzerland and the case of the two businessmen.  - Reuters