A state-owned luxury jet, used by former dictator Muammar Gaddafi, is free to fly back to Libya, a French court ruled on Monday.

The Airbus A340 plane has been in the southern French city of Perpignan since 2012 for maintenance.

In the High Court of Perpignan, Kuwait's Kharafi group claimed rights to the plane, arguing that the Gaddafi-era government had broken a multi-million contract awarded to the group in 2006 to build a luxury resort in Tripoli.

Gaddafi's government unilaterally cancelled the resort contract in 2010, which was supposed to include a five-star hotel, apartments, villas and a shopping mall on Tajoura coast.

An Egyptian court ruled in March 2013 that the Libyan state had to pay $930 million in compensation to Kharafi group, and the plane had to be seized in France as part of efforts to recover the money.

The High Court of Perpignan said the plane has immunity from being seized and allowed it to fly back to Libya.