TORONTO - The Ontario Court of Appeal upheld a decision Friday to stay extradition proceedings against Abdullah Khadr, a man the federal government says is an admitted al Qaeda collaborator.

In a unanimous decision, the three-judge panel dismissed an appeal filed by the Attorney General of Canada on behalf of the United States, which wants the Ottawa-born Khadr sent to Boston and tried on charges of supplying weapons to al Qaeda in Pakistan.

The federal government had argued last month that Superior Court Justice Christopher Speyer went beyond his jurisdiction in ordering the stay that allowed Khadr to go free last summer.

But the appeal court disagreed, saying Speyer had the power to grant a stay for abuse of process, based on gross misconduct by the U.S. in its treatment of Khadr.

Khadr's lawyers argued for the stay on the grounds his self-incriminating statements were the product of torture in Pakistan in which the Americans had been complicit.

"When a requesting state such as the United States approaches a foreign court such as Canada they are required to come with clean hands and they didn't do so," Khadr's lawyer Dennis Edney said Friday in an interview. "They didn't advise our courts that they had contributed directly to the abuse of Mr. Khadr, and any information they obtained from Mr. Khadr was derived from his abuse."

"It is a triumph for the rule of law," he said. "Our court system refused to allow tainted evidence to be used in its court."

In its 24-page judgment, the panel said a judge isn't required by law to sacrifice important legal rights and democratic values to ensure a proceeding against an alleged terrorist goes forward.

Cases involving alleged terrorists or other enemies of the state who seek to destroy the fundamental values of democracy and the rule of law test our commitment to those values, the appeal court said.

But the extradition judge's statement that "in civilized democracies, the rule of law must prevail over intelligence objectives" was compelling, the appeal court said.

"The appeal court recognized as the lower court did that they had to protect the integrity of the Canadian judicial system," said Edney. "And it did so by refusing to allow evidence that was derived from the fundamental abuses of a Canadian citizen."

The Department of Justice said it is reviewing the decision.

Speyer stayed the proceedings last August on the grounds that American conduct in Khadr's arrest and detention in Pakistan was shocking and unjustifiable.

The U.S. paid Pakistani intelligence agents $500,000 in October 2004 to kidnap Khadr. He was initially prevented from speaking to consular officials and beaten until he co-operated with Pakistani intelligence. After 14 months in custody, he returned to Canada in December 2005 and was arrested two weeks later on the U.S. extradition warrant.

The Attorney General's argument that an admitted terrorist collaborator has been allowed to walk free is unfounded because Khadr could be tried in Canada, the appeal court panel said.

The government has 60 days to decide whether it wants to appeal to the Supreme Court of Canada, said Edney, adding that Khadr was happy with Friday's decision.

But the lawyer noted the government appealed to the Supreme Court of Canada twice in the case of Abdullah's younger brother Omar, who is serving time at Guantanamo Bay for war crimes.

The Khadrs are the sons of the late Ahmad Said Khadr, who was closely associated with Osama bin Laden and allegedly raised money for al Qaeda.