A Thai court has rejected a U.S. request to extradite a Russian arms dealer dubbed the "Merchant of Death" to face terrorism charges.

Tuesday's ruling marks a setback for the United States, which used an elaborate scheme to lure Viktor Bout to Bangkok in March 2008.

Bout was arrested after U.S. agents posed as arms buyers for the Revolutionary Armed Forces of Colombia, or FARC, which Washington classifies as a terrorist organization.

The judge said the U.S. has 72 hours to indicate if an appeal will be filed, and, if not, Bout will be set free.

If an appeal is filed, Bout will be held pending further proceedings.

Bout has been linked to some of the world's most notorious conflicts. He has repeatedly denied any wrongdoing.