A former Guantanamo Bay detainee has dropped his case against Australia for allegedly being complicit in his torture while he was held overseas, Prime Minister Julia Gillard said Saturday.
Egyptian-born Mamdouh Habib last year won the right to sue the government over interrogations in which he alleges he was tortured, beaten and shackled to the floor in the presence of Australian spies, diplomats and police officers.
Gillard said Habib, an Australian citizen, had now reached a confidential, out-of-court settlement with the government.
"Clearly this is a matter that has been a long time in the making and in the interests of the Commonwealth it wasn't in our interests to have a long and protracted litigation," Gillard told reporters.
"So the matter has been settled. The terms of the settlement are confidential."
A spokesman for Attorney-General Robert McClelland said the agreement was reached on December 17 in relation to Habib's claim for compensation following his arrest and detention overseas between 2001 and 2005.
While the terms of the settlement cannot be disclosed, the government has indicated that it does not accept any legal liability, he said.
Habib's claims centred on 12 interrogation sessions which took place following his arrest in Pakistan in the wake of the September 11, 2001 attacks on the United States.
The married father-of-four had been seeking compensation over the electrocution, burning, sleep deprivation and drug injections he claimed he endured in Pakistan, Egypt, Afghanistan and at Guantanamo Bay.
Habib had not accused the Australian officials of mistreating him directly, but said they had harmed him indirectly by "aiding, abetting and counselling his torture and other inhumane treatment by foreign officials".
Habib was released without charge from Guantanamo Bay in January 2005.
Australia has denied any role in Habib's alleged rendition and torture but had fought against his right to sue since 2006, saying an Australian court could not not rule illegal the acts of another government.
Habib has worked as a taxi driver, cleaner and cafe owner since coming to Australia in 1980 and insists he was visiting Pakistan at the time of his arrest for valid business reasons.