THE HAGUE (BBC) -The UN's highest court has cleared Serbia of direct responsibility for genocide during the 1990s Bosnian war.

But the International Court of Justice did rule that Belgrade had violated international law by failing to prevent the 1995 massacre at Srebrenica.

Bosnia brought the case and would have sought billions of dollars from Serbia in compensation if successful.

The case is the first of a state being charged with genocide. Individuals have been convicted of genocide in Bosnia.

The Bosnian Muslim leader expressed disappointment at the ruling, which was welcomed both in Serbia and the Bosnian Serb Republic.

At least 100,000 people died in the 1992-1995 war, triggered by the break-up of the former Yugoslavia. Bosnia's Muslims and Croats wanted to cut ties with Belgrade, a move opposed by Bosnian Serbs.

The case, Bosnia and Herzegovina versus Serbia and Montenegro, began a year ago and a panel of judges has been deliberating since hearings ended in May 2006.

Bosnia argued that Belgrade incited ethnic hatred, armed Bosnian Serbs and was an active participant in the killings.

Belgrade said the conflict was an internal war between Bosnia's ethnic groups and denied any state role in genocide. In the ruling, the president of the court, Judge Rosalyn Higgins, said: "The court finds that the acts of genocide at Srebrenica cannot be attributed to the respondent's (Serbia) state organs."

However the court added that the leaders of Serbia failed to comply with its international obligation to prevent the killings and punish hose responsible.

The court also rejected Bosnia's claim for reparations.

"Financial compensation is not the appropriate form of reparation," the ruling said.

The war crimes tribunal in The Hague has already found individuals guilty of genocide in Bosnia and established the Srebrenica massacre as genocide.