The convictions of two Croatian generals for murdering and illegally expelling Serbian civilians in a 1995 military blitz have been overturned by the UN's appeals chamber of the international criminal tribunal for the former Yugoslavia.

The decision, by a 3-2 majority in the UN court's five-judge appeals chamber, is one of the most significant reversals in the court's 18-year history and overturns a verdict that dealt a blow to Croatia's self-image as a victim of atrocities, rather than a perpetrator, during the Balkan wars in the 1990s.

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Mladen Markac, a former Croatian police commander, smiles as he talks to his lawyer in the courtroom of the UN's international criminal tribunal for the former Yugoslavia before his appeal judgment Friday in The Hague. (Bas Czerwinski/Pool/Reuters)

A Croatian government plane brought Ante Gotovina and Mladen Markac from the Hague, Netherlands to Zagreb, Croatia's capital midafternoon. Croatia's Prime Minister Zoran Milanovic and other top officials welcomed them.

Gotovina told the cheering crowd singing patriotic songs that "this is our joint victory."

"We have won, the war is over and let's turn to the future," Gotovina said as the crowd chanted Croatia's main wartime call, "to war, to war for our people."

Ruling enrages Serbian opponents of UN court

While supporters of the generals at home in Croatia cheered and set off fireworks, the acquittals enraged hardline opponents of the UN court in Serbia who accuse its judges of anti-Serb bias.

The country's nationalist President Tomislav Nikolic said in a statement that the "scandalous" decision by The Hague court was clearly "political and not legal" and "will not contribute to stabilization of the situation in the region but will reopen all wounds."

Serbian government officials said later Friday they would be scaling down co-operation with the tribunal to "only technical levels" because of the ruling. They did not elaborate.

Serbia's war crimes prosecutor Vladimir Vukcevic also branded the ruling "scandalous," saying it endangered the general principle that war crimes must be punished.

"This was one of the biggest war crimes in the former Yugoslavia, murder, expulsion and endangering of several hundred thousand people and no one was held responsible," Vukcevic told The Associated Press.

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Former Croatian Army General Ante Gotovina pictured Friday in the courtroom of the Yugoslav war crimes tribunal for his appeal judgement in The Hague, Netherlands. (Bas Czerwinski/Pool/Associated Press)

Gotovina's and Markac's convictions were one of the few at the tribunal to punish perpetrators of atrocities against Serbian civilians. The majority of criminals convicted have been Serbs. The Bosnian Serb wartime leader and military chief, Radovan Karadzic and Gen. Ratko Mladic, are currently on trial for allegedly masterminding Serbian atrocities.

The tribunal announced late Friday that a conference scheduled for next Thursday in Belgrade to discuss the tribunal's legacy when it finally closes its doors had been postponed.

Prosecutors failed to prove conspiracy, say judges

Gotovina and Markac had been sentenced to 24 and 18 years respectively in 2011 for crimes, including the murder and the deportation of Serbs, during the 1995 Croatian offensive dubbed "Operation Storm." Judges ruled that both men were part of a criminal conspiracy led by former Croatian president Franjo Tudjman to expel Serbs.

The fighting in Croatia was part of the wars that erupted across the Balkans with the breakup of Yugoslavia in the 1990s. The most deadly was in Bosnia, where Serbs battled Muslims and Croats in a four-year struggle that claimed some 100,000 lives.

Serbia claims that over 1,000 Serbs were killed and more than 200,000 driven from their homes during the Croatian operation. Tribunal prosecutors put the death toll much lower, at 324, but told the court the victims included elderly and disabled villagers — many of whom had been shot in the head.

But the appeals judges said prosecutors failed to prove the existence of such a conspiracy, effectively clearing Croatia's entire wartime leadership of war crimes in the operation. It occurred at the end of Croatia's battle to secede from the crumbling Yugoslavia and involved grabbing back land along its border with Bosnia that had earlier been occupied by rebel Serbs.

"Does this vindicate that particular operation as a proper and just attempt to bring back this land under Croatia? Of course," said Gotovina's American lawyer, Greg Kehoe.

Croatian Prime Minister Zoran Milanovic called the ruling "an important moment for Croatia."

"We are talking about two innocent people. I say thank you to them for surviving so long for the sake of Croatia," he said.