Jakarta – An Indonesian appeal court has ruled that a corruption case against former dictator Suharto should be dropped, overruling a lower court's order to reopen the case.

The attorney-general's office announced on May 11 that it had halted legal proceedings against the ageing Suharto, who is accused by critics of amassing billions of dollars in state assets during his iron-fisted rule. It cited poor health, saying a stroke had left Suharto unable to follow proceedings.

In response to a suit filed by activists, the South Jakarta district court ruled in June that the case be reopened. But the Jakarta Court of Appeal has overruled it, court spokesman Yohannes Suhadi told reporters.

A panel of three judges said in their ruling, a copy of which was released to the press, that Suharto's inability to communicate both verbally and in writing "is a reason to void any authority to indict" him.

The attorney-general's office had based its decision to drop the case on an interpretation of a Supreme Court decree, which had recommended that Suharto face trial if and when his physical condition improved. The office argued it could not implement the decree as Suharto's health had deteriorated too much.

The appeal court's decision is not necessarily the end of the legal saga. The activists who initially lodged the lawsuit could appeal to the Supreme Court and others could attempt to launch similar suits.

Due to ill health, Suharto has never taken the stand for corruption charges levelled against him in 2000. These accuse him of misusing more than 500 million dollars from charitable foundations he set up during his rule – separate to the billions in state assets he is alleged by critics to have siphoned off.

Suharto, 85, stepped down amid mounting unrest in 1998 after ruling for more than three decades and has lived at his upscale family residence in the leafy Jakarta suburb of Menteng since then.

He has been in and out of hospital for various health problems in recent years, including at least three operations and nearly a month of treatment for stomach problems this year.