An apology issued by Swiss President Hans-Rudolf Merz to Libya last week may not be legal, according to his critics.

Merz apologized on Thursday for the brief detention of Libyan leader Moammar Gadhafi's son, Hannibal. The statement drew criticism in the Swiss media over the weekend.

Swiss Justice Minister Eveline Widmer-Schlumpft accused Merz of overstepping his bounds in an interview published in the Swiss newspaper, Sonntag, on Monday.

Gadhafi, 33, and his pregnant wife Aline were arrested in a Geneva hotel in July 2008 in connection with allegations of mistreating two domestic servants. They were held in custody for two days before being released on bail.

The charges against Gadhafi and his wife were later dropped when the formal complaint against them was withdrawn and an undisclosed settlement was reached.

Engineers detained

But the incident caused Libya to end bilateral co-operation programs, place restrictions on the operation of Swiss companies in the country, cut oil supplies to Switzerland and withdraw assets from Swiss banks. Gadhafi also filed a civil suit against the Geneva police for the arrest.

Two Swiss engineers, Max Goeldi and Rachid Hamdani, were then detained four days later and have not been allowed to leave Libya since.

"We are apologizing for what happened to Hannibal Gadhafi and the two sides agreed to form a committee to discuss the matter," Merz said.

The independent three-judge arbitration panel based in London will be established to examine the circumstances of Gadhafi's arrest, said the president.

The legal basis of the tribunal is questionable, Widmer-Schlumpft said.

Also under Switzerland's federalist system, cantonal regional governments are given wide-ranging powers including policing and it doesn't appear the Swiss government can legally apologize in the case, she said.

Constitutional lawyer Thomas Fleiner told the Swiss News Agency the agreement appears to undermine Swiss law.

'Unjust arrest'

In the apology, Merz said the Swiss government was sorry for the "unjust arrest of Libyan diplomats by Geneva police."

The president has countered criticism by saying that he never said the arrest was illegal.

Swiss ministers have said they were unaware any agreement was even in the offing with Libya.

Merz faced further criticism for offering the apology and not securing the release of the two engineers. Libya has offered a verbal agreement that they will be issued exit visas by Sept. 1.

But the apology has helped settled the disagreement regarding Gadhafi's detention and has set the foundation for Switzerland to get back into the Libyan market, Merz added.

Menz's critics argue the apology was issued solely because of the country's business interests in Libyan oil.

Swiss People's Party MP Luza Strom said Switzerland has placed itself in a position where it may be forced to make further concessions.

With files from The Associated Press