Italian court has dropped a case against a U.S. soldier for killing an Italian intelligence agent at a check-point in Iraq on the grounds that it does not have jurisdiction, lawyers said on Thursday.

U.S. soldier Mario Lozano was being tried in absentia in Rome for shooting Italian agent Nicola Calipari in 2005 as he escorted a newly freed Italian hostage out of Iraq. Washington refused to hand over Lozano for trial.

Lozano's Italian defence lawyer Alberto Biffani said he was "very satisfied" with the outcome.

"The court has granted our request on lack of jurisdiction so we win this case," he said at the court house. "Obviously the public prosecutor can decide to appeal."