SARAJEVO (Reuters) - Naser Oric, the Bosnian Muslim commander who led the defense of Srebrenica during the 1992-95 war, was cleared of war crimes against Serbs on Monday, a ruling greeted by both celebration and condemnation in the divided state.

FILE PHOTO: Bosnian Muslim Naser Oric smiles as he leaves the ICTY building after his release in the Hague, Netherlands July 3, 2008. REUTERS/Michael Kooren/File Photo

Bosnian Muslims, who largely see Oric as a hero, broke into applause as he and a fellow soldier left the courtroom free men. Cheering crowds massed around them outside.

Families of Bosnian Serbs killed in the war, who see Oric and his troops as criminals, walked out of the hearing in the Bosnian capital Sarajevo in protest.

“This is horrific, this is a scandal. Everybody expected that he will be punished. Is this a justice? I am speechless,” said Radojka Filipovic from Bratunac, near Srebrenica. She said Oric’s forces killed at least six of her relatives.

Milorad Dodik, the president of Bosnia’s autonomous Serb Republic, called on Serb lawyers to withdraw from the shared national legal system. The justice minister of neighboring Serbia, Nela Kuburovic, called the ruling “shameful”.

The case went to the heart of fractured Bosnia, haunted by ethnic divides and long-running grievances that have blocked its progress to joining the European Union and NATO.

Bosnia was hit by a devastating war in the 1990s after the Bosnian Serbs, helped by Serbia, tried to carve out a separate statelet following the break up of Yugoslavia.

Bosnian Serbs have accused Oric and his men of killing about 3,000 of their people in the Srebrenica area during the conflict.

Bosnian Muslims, or Bosniaks, hailed his role in defending Srebrenica, where Bosnian Serb forces later killed more than 8,000 Muslim men and boys - widely seen as Europe’s worst atrocity since World War Two.

After the war, the country was divided into two autonomous regions, the Serb Republic and the Bosniak-Croat Federation, linked via a weak central government.

SREBRENICA

“Serbs cannot accept this and this proves this country and its judiciary should not exist,” Serb Republic President Dodik said in the town of Banja Luka after the verdict. “I call on all Serbs in the court and prosecution to pull out from these institutions.”

Dodik has long disputed the authority of the national legal system, which he says was established on the order of Bosnia’s Western peace envoys, and has repeatedly threatened to secede if his region’s autonomy is undermined.

Dodik said the verdict would likely “revive the idea of holding a referendum on the state court” - the last attempt to hold a referendum on the status of the state court, in 2015, was halted amid Western warnings.

Bosnia’s three-man presidency chairman Dragan Covic, a Bosnian Croat, said negative rhetoric over the case could be a setback for Bosnia’s progress.

Oric was acquitted of war crimes against Serbs by the International Criminal Tribunal for the Former Yugoslavia (ICTY) in 2008, but was arrested again in June 2015 in Switzerland on a warrant from Serbia accusing him of killing three Bosnian Serb prisoners of war early in the conflict.

“It was only just to acquit Oric of war crimes charges,” Hatidza Mehmedovic, a Bosnian Muslim who lost her husband and two sons in the Srebrenica massacre, told the Fena news agency. “It was a great injustice to drag him in courts from The Hague to here.”

Oric did not speak to reporters outside the court.

Dozens of Bosnian Serbs, including senior political and military leaders, have been sentenced by the ICTY and a Bosnian war crimes court over the Srebrenica massacre, which was declared genocide by two international courts.

Millions of people were displaced and more than 100,000 died in the war.