An Egyptian appeals court on Saturday cancelled a ruling to list the Palestinian group Hamas as a terrorist organization, judicial sources said, signaling a possible easing of pressure on the Gaza Strip's ruling faction.
Hamas welcomed the decision by Egypt, which faces an Islamist insurgency it says is fueled by weapons smuggled from Gaza. Hamas said the ruling would help relations with Cairo.
Hamas is an offshoot of Egypt's Muslim Brotherhood which the authorities have declared a terrorist group and have repressed since the army ousted one of its leaders, Mohammed Morsi, from the presidency in 2013.
Cairo has for many years played a central role in engineering ceasefires between neighboring Israel and Hamas, which dominates Gaza, including a truce reached between the sides in August that ended a 50-day war.
Egyptian officials say weapons are smuggled from Gaza into Egypt where they end up with militant groups fighting to topple Cairo's Western-backed government.
Islamist militants based in Egypt's Sinai region, bordering Gaza and Israel, have killed hundreds of police and soldiers since Morsi's political demise following protests against his rule. The insurgency has spread to other parts of Egypt, the most populous Arab country.
The lawyer who first raised the case against Hamas told Reuters he would request that Egypt's Foreign Ministry place Hamas on its list of terrorist organizations, based on previous judicial decisions.
"This ruling does not return us to zero. I have two rulings placing the Brotherhood and the Izz ad-Din al-Qassam Brigades on the list of terrorist organizations," Ashraf Farahat said.
Qassam Brigades, the armed wing of Hamas, was classified as a terrorist organization by an Egyptian court for urgent affairs in January.
The Egyptian government informed the prosecution at the time that it will appeal the ruling, saying that a court on this level does not have the authority to decide the issue. On Saturday, the court of appeals accepted the state's request, ruling that the decision to list Hamas as a terrorist organization was indeed not in the court's authority.
The Muslim Brotherhood was banned in 2013 following Morsi's ouster as part of a crackdown including many liberal and secular activists.
Hamas spokesman Sami Abu Zuhri welcomed Saturday's decision as "correcting a previous mistake".
"The decision today represents a commitment by Cairo to its strong role towards the Palestinian cause. There is no doubt that (it) will have positive results and impacts on the relation between Hamas and Cairo," he told Reuters.
Despite the high tension between Hamas and the Egyptian authorities, Hamas recently confirmed that it has been in contact with Egypt, mostly with Egyptian intelligence officials. Also, Hamas' political bureau chief Khaled Meshal has been attempting to foster closer ties with Saudi Arabia's new king in recent months, in attempt to push for a reconciliation with Egypt.
Israeli lawmaker Haim Yellin (Yesh Atid), meanwhile, was harshly critical of the Egyptian decision. "Hamas is a murderous terrorist group, which does not recognize the State of Israel and incites against it," Yellin said on Saturday.
"Digging tunnels and firing rockets at the innocent is terrorism – Egypt has given terrorism a significant boost today. Egypt has forgotten all too quickly the devastation and serious damage to tourism that Hamas wrought on it under the wings of the Muslim Brotherhood."