Madrid (CNN) -- Preliminary charges against Spain's Princess Cristina in a financial corruption case will be dropped, an appeals court ruled Tuesday.
In a 2-1 decision, an appeals court in the Balearic Islands agreed with prosecutors and the princess' defense team, which argued there was insufficient evidence to bring the unprecedented preliminary charges against the princess, according to a copy of the court order viewed by CNN.
Princess Cristina is the youngest daughter of King Juan Carlos.
The preliminary charges were brought last month by a magistrate investigating the case in which the princess' husband, Inaki Urgandarin, already faces preliminary charges.
There was no immediate reaction from the palace on the development.
Judge Jose Castro issued the order that brought the preliminary charges against Princess Cristina April 3. The same judge had decided in 2012 there was insufficient evidence to name the princess as a suspect, but said in his decision last month that further investigation changed his mind and that Princess Cristina should be questioned regarding "the handling and destination of funds obtained" through her husband's foundation and a separate company.
Urgandarin has faced preliminary charges for more than a year. He is accused of diverting, for private use, public funds earmarked for his non-profit foundation. He denies any wrongdoing.
The scandal already had created unprecedented problems for the popular royal family due to Urdangarin's alleged involvement, but when the princess was also named as a suspect, it became top news at home and abroad.
It was the first time since democracy was restored in Spain in 1975 that a member of King Juan Carlos' immediate family faced preliminary charges of any kind, in any case, a spokesman for the Royal Household said.
The government's monthly CIS poll for April showed the Royal Household has an approval rating of just 3.68 on a scale of 10, below the military, police forces and news media, but higher than the government, unions and a business owners association. In October 2011, it had a rating of 4.89, and in previous years it was among the most highly rated of Spanish institutions.
In April, the Royal Household made public for the first time that it had quietly asked the government in February to include the monarchy in a new law on transparency -- regarding financing and other activities -- that is currently being debated and pending approval, a Royal Household senior spokesman said.