© Reuters/Marvin Gentry Gabe Watson enters the Mel Bailey Criminal Justice Center for the continuation of his capital murder trial in Birmingham, Alabama February 23, 2012.
Prosecutors said Gabe Watson, motivated by potential insurance payouts, had drowned his wife Tina in October 2003 by turning off her oxygen supply during their dive in the waters off Townsville, Australia.
But after prosecutors wrapped up their case on Thursday, Judge Tommy Nail ruled there was no evidence to suggest that Gabe Watson intended to kill.
"The only way to convict this man of capital murder is to use speculation and conjecture," Nail said. "The state has failed to establish an intentional killing."
Watson's mother collapsed in tears outside of the courtroom after hearing the news.
"I am thrilled for Gabe. He can finally begin the healing process," said Watson's father, David Watson. "Hopefully he can put his life back together."
Gabe Watson served 18 months in an Australian jail after pleading guilty to failing to do enough to help his wife during the dive.
He was tried for murder in Birmingham, Alabama, because that was where the couple married and prosecutors say he plotted Tina's death.
Alabama authorities agreed to waive the death penalty in order to get Australian authorities to release Watson back to the United States, meaning he would have faced a maximum lifetime prison sentence had he been convicted.
The judge's ruling Thursday abruptly ended the trial, which was in its second week and had been closely watched by the Australian media.
Tina Watson's father was the state's final witness. He told jurors how Gabe Watson had sued his wife's family after her death for everything she owned, down to her Gone with the Wind videos.
"It should have gone to a jury to decide," Tommy Thomas told reporters afterward. "We are disappointed. There is a lot more protection for the accused than the victim."
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