The indictment of Devyani Khobragade, an Indian consular official who was arrested in New York in December on charges of visa fraud, was dismissed by a U.S. federal judge on Wednesday on the grounds that she was protected by diplomatic immunity at the time of her indictment.

The case had led to a diplomatic spat between the U.S. and India after Khobragade was charged with visa fraud and of making false statements about her maid who was allegedly mistreated and underpaid, by U.S. Attorney Preet Bharara in New York. U.S. District Judge Shira Scheindlin granted Khobragade’s request to dismiss the indictment, but left the option open for prosecutors to bring new charges.

“If the acts charged in the Indictment were not ‘performed in the exercise of official functions,’ then there is currently no bar to a new indictment against Khobragade,” Judge Scheindlin reportedly wrote in a 14-page opinion, according to the Wall street Journal.

Scheindlin also wrote that “even if Khobragade had no immunity at the time of her arrest and has none now, her acquisition of immunity during the pendency of proceedings mandates dismissal.”

Khobragade's arrest and subsequent strip search on Dec. 12 provoked a strong reaction from India, which reacted by scaling back security outside the U.S. embassy in New Delhi and withdrawing certain privileges provided to American diplomats based in the country.

“We are heartened that the court agreed with our legal analysis and rejected the prosecution’s arguments by dismissing the case,” Daniel Arshack, Khobragade's lawyer, said Thursday, according to Bloomberg. “Technically, the prosecution remains free to re-indict Dr. Khobragade. However, the decision to do so might well be viewed as an aggressive and unnecessary act. This current circumstance might well present the best opportunity for a lasting and final diplomatic resolution.”

The U.S. state department, in a note on Jan. 8, had asked the Indian government to waive Khobragade's diplomatic immunity "in order that the charges may be adjudicated in accordance with the laws of the United States."

However, the Indian government did not agree to the request prompting the State Department to ask Khobragade to leave the country immediately. The next day, her counsel asked the court to “dismiss the case on grounds of diplomatic immunity, or alternately to exonerate her conditions of bail.” The court had modified her bail conditions and gave her permission to return to India but withheld judgment of her case.

“Because Khobragade moved to dismiss on January 9, 2014, the motion must be decided in reference to her diplomatic status on that date,” Scheindlin ruled Wednesday, adding that because “the Court lacked jurisdiction over her at that time, and at the time the Indictment was returned, the motion must be granted.”