A Baltimore judge has dismissed a legal action seeking to force Allfirst executives and directors to personally repay $691.2 million (€658.4 million) lost by foreign exchange dealer Mr John Rusnak in a trading scandal uncovered last February.

Circuit Judge Albert J Matricciani ruled that Irish law applied in the case concerning the bank, which was fully owned by AIB at the time of the losses.

The lawsuit was taken by Tomran Incorporated, an Allfirst depositor and owner of 4,800 shares of AIB PLC.

Tomran sued former and current Allfirst directors and officers, claiming they were negligent in their duties over the five years the fraud continued, and should repay the Baltimore bank.

The investor's lawyers argued the case should be heard in the state of Maryland as Allfirst was a Maryland chartered institution, the fraud was committed in Maryland and most of the defendants lived in the state.

"It became clear to me as I went on that Irish law was controlling," Judge Matricciani told the Baltimore Sun. "Irish law wouldn't have permitted this action. I didn't have any choice."

The legal action named 15 directors and officers, including former Allfirst chairman Mr Frank Bramble and former CEO Ms Susan Keating, both of whom have retired since the scandal broke.

Mr Mark Gately, who represented former Allfirst treasurer Mr David Cronin, one of seven officials fired after the fraud was uncovered, said he was "delighted with the result and the reasoning" behind Monday's court ruling.