Ties between the two countries could suffer due to the courts order as USA has called for immediate release of the diplomat. He had told a court that the murder was committed in an act of self-defence to thwart robbery attempts.
The Lahore High Court has ordered that Davis cannot be moved out of the country while his case was being adjudged. Davis was remanded to six-days in police custody on Jan 28.
Pakistan is a major ally of USA's 'war on terror' and this case has put it in an awkward situation wherein there is heavy pressure from local media and hard-line extremists to not release Davis.
The US embassy in Pakistan has supported the diplomat saying that the murder was an act of self-defence and a Congressional delegation also met President Zardari to raise the issue.
US embassy said that the arrest was a violation of international laws and the Vienna Convention.