A military judge has dismissed charges against Canadian detainee Omar Khadr, who was 15 when he was captured in Afghanistan, saying the case is outside his jurisdiction.

The surprise ruling came minutes after Khadr's arraignment.

"You could have heard a pin drop in the courtroom this morning when the judge announced his decision. He was the one, incidentally, who noticed the discrepancy," CTV's Washington Bureau Chief Tom Clark reported from Guantanamo Bay.

The decision also came as a relief to his family in Toronto, although Khadr, now 20, will remain in custody at Guantanamo Bay.

"We always had hope, and we pray and we're going to continue doing that," Khadr's sister, Zaynab, told CTV Newsnet by phone in Toronto.

Khadr had been classified as an "enemy combatant" by a military panel years earlier. But because he was not classified as an "alien unlawful enemy combatant," Army Col. Peter Brownback said he had no choice but to throw the case out.

"The charges are dismissed without prejudice," Brownback said as he adjourned the proceeding.

Under the Military Commissions Act, which U.S. President George Bush signed last year after the Supreme Court threw out the previous war-crimes trial system, only those classified as "unlawful" enemy combatants can face war trials there.

"Obviously there are illegal enemy combatants and then there are legal enemy combatants," Clark said.

"In other words if you're wearing the uniform of another country, just because you fired a shot in anger at an American soldier doesn't mean that it is illegal," Clark said.

The ramifications of the ruling are an "unbelievable defeat for the Bush administration and the previous Congress that enacted this. It is enormous," Clark said.

Hours after the decision, a second judge threw out charges against Salim Ahmed Hamdan, former driver for al Qaeda leader Osama bin Laden. The judge said similarly that he lacked legal jurisdiction.

Khadr faced charges he committed murder in violation of the law of war, attempted murder in violation of the law of war, conspiracy, providing material support for terrorism and spying.

The son of an alleged al Qaeda financier, Khadr was accused of killing U.S. Army Sgt. Christopher Speer with a grenade during a firefight in Afghanistan on July 27, 2002.

While the judge has dismissed the charges against Khadr, authorities have said they can still legally hold him as an enemy combatant.

Meanwhile, the prosecutors have asked the judge for 72 hours in which to appeal.

"They are trying to appeal to a court within the next 72 hours, a court that does not exist and that they are hoping that might be made up in the next 72 hours. The chaos around this system is almost indescribable," Clark said.

Now that that process is in doubt, some are calling for Canada's government to intervene.

"Whatever we may think about Mr. Khadr and his past, he is a Canadian citizen with the rights of a Canadian citizen -- and the government should take up his case actively with U.S. authorities," said Liberal Deputy Leader Michael Ignatieff.

Khadr is one of three prisoners of the approximately 380 men held at the isolated military base to be formally charged under the new military tribunal system.

"Certainly a number of military lawyers here are hoping that this will open the door to throwing all of these cases into a civilian court system, which they say works perfectly well," Clark said.

"What the military defence lawyers are saying here is that this proves once and for all that the military commission system is simply unworkable and should be disbanded as quickly as possible," he said.

Khadr, an Ottawa native, was 15 when he was first brought to the U.S. military prison camp in southeast Cuba.

He became the first juvenile to be charged with war crimes in modern history.

"This is something that did not happen in the former Yugoslavia, it didn't happen in Rwanda and it didn't happen in Sierra Leone where kids were involved in all sorts of horrific war-crime activities," Muneer Ahmad, former lawyer for Khadr, told Canada AM from Washington on Monday.

In Ottawa, Foreign Affairs officials said they were reviewing the situation, but had no other immediate comment.

With files from The Associated Press