File picture: SAPS (Twitter)

Cairo - An Egyptian court on Thursday acquitted 40 employees of non-governmental organisations in a years-long case that has prompted criticism from abroad, judicial sources said.

The decision was issued by the Cairo Criminal Court in a retrial ordered in April by Egypt's top appeals court.

The case involving 43 people dates back to 2011, months after a popular uprising forced long-time autocrat Hosny Mubarak out of power.

The trial of the 43, including 19 US and two German citizens, began in February 2012 on charges of operating without licences and receiving illegal foreign funding.

Most of the foreign defendants left Egypt in March 2012, when a court dropped a travel ban against them, and were tried in absentia.

In 2013, another court sentenced 16 workers to jail terms ranging from one to two years in the case.

The same court also handed down a five-year jail sentence to 27 other defendants who were tried in absentia in the same case.

The employees worked for one German group, the Konrad Adenauer Foundation, and four US-based organisations: the National Democratic Institute, the International Republican Institute, the International Center for Journalists and Freedom House.

The German Foreign Ministry reacted "with joy and satisfaction" to Thursday's mass acquittal.

"With this verdict, a years-long dispute is settled, which was a burden for our relations with Egypt. We are glad that we can open a new chapter now," the ministry said in a statement.

The new verdict was facilitated by an additional protocol to the German-Egyptian cultural agreement, which went into effect in 2017, according to the statement. 

This accord regulates activities of German political foundations and excludes them from the Egyptian NGO law, the ministry added.

The three other workers not covered by Thursday's verdict had not filed appeals against earlier rulings.

In the Egyptian justice system, a defendant's presence is mandatory for the court to hear his or her appeal.

Rights watchdog Amnesty International said Thursday's verdict is a step in the right direction for Egyptian justice.

"However, today's ruling only relates to the first phase of the case which investigated the funding of international organizations; the investigation into local Egyptian NGOs is ongoing and dozens of staff are still at risk," North Africa campaigns director Najia Bounaim said.

"The key test now will be whether today's court decision paves the way for an end to the persecution of all human rights defenders in the country," she added in a statement.

Egyptian rights groups have complained of coming under increasing pressure since 2013 when the army deposed the democratically elected - but divisive - Islamist president Mohammed Morsi.

Last month, President Abdel-Fattah al-Sissi ordered the revision of a controversial law, which rights advocates have repeatedly blamed for curbing the work of NGOs.