US District Judge James Robertson said American courts lacked jurisdiction over the matter.
“The claims against them for acts allegedly done in their official capacities will be dismissed for lack of subject matter jurisdiction,” Robertson wrote in a ruling issued on Friday.
The dismissed legal case was filed by more than 900 family members of those who perished in the September 11 terrorist attacks on New York and Washington.
The defendants were former Saudi intelligence chief Prince Turki al-Faisal bin Abd al-Aziz Al Saud and Defence Minister Prince Sultan bin Abd al-Aziz Al Saud, who also chairs a government council handling Saudi assistance to Islamic organisations.
The complaint was based on allegations – repeatedly denied by Saudi officials – that members of the Saudi royal family had secretly channelled assistance to bin Ladin and his al-Qaida network in exchange for a pledge not to carry out attacks in the desert kingdom.
The plaintiffs alleged that Prince Turki had secretly travelled to the southern Afghan city of Kandahar in July of 1998 for talks with bin Ladin’s representatives, during which he was able to secure al-Qaida’s promise not to use “the infrastructure in Afghanistan to subvert the royal families’ control of Saudi government.”
In exchange, the Saudis promised not to seek bin Ladin’s extradition and gave Taliban rulers of Afghanistan 400 new pickup trucks, according to the complaint.
Turki was also “instrumental” in arranging a meeting in Kandahar between senior Iraq intelligence operative Faruq al-Hijazi, who served as Saddam Hussein’s ambassador to Turkey, and bin Ladin in December of 1998, the complaint said.
“(Prince Sultan) publicly supported and funded several Islamic charities that were sponsoring Usama bin Ladin and al-Qaida operations”
US intelligence officials say they lack compelling evidence that the meeting took place.
In addition, the plaintiffs insisted that Sultan, in his capacity as chairman of the Saudi Supreme Council for Islamic Affairs, “publicly supported and funded several Islamic charities that were sponsoring Usama bin Ladin and al-Qaida operations.”
But the charges were refuted by both Saudi leaders, who argued no double dealing had ever taken place between the kingdom and bin Ladin’s organisation.
Saudi officials have blamed al-Qaida for a suicide bombing earlier this month that claimed the lives of 17 people and wounded 100 others at an expatriate housing complex outside Riyadh and said they were now waging “a total war” against the group.
In documents submitted to the court, Turki admitted travelling twice to Kandahar in 1998 for talks with Taliban leader Mullah Umar, but insisted the purpose of the visits was “to convey an official Saudi request to extradite Usama bin Ladin.”
He said that Mullah Umar treated him “abusively” and the talks fell through. He also denied the Saudi intelligence service Istakhbarat had ever facilitated money transfer to al-Qaida.
Prince Sultan, for his part, provided official documents stating that the International Islamic Relief Organisation, the Muslim World League and the World Assembly of Muslim Youth – all accused of funding al-Qaida – had received grants from the government of Saudi Arabia and not from him personally and, therefore, he could not be held accountable.
In July, US President George Bush refused to declassify 28 pages of a congressional report on possible links between Saudi government officials and the September 11 hijackers, saying that “would help the enemy” by revealing intelligence sources and methods.