The investigations were launched last year after reports of prisoner abuse during questioning by the Military Intelligence and Security Service in late 2003, when Dutch troops were on a reconstruction mission in southern Iraq.
The claims sparked outrage, with some opposition lawmakers who drew parallels with the notorious mistreatment by U.S. forces of Iraqi detainees at Abu Ghraib prison.
"The good reputation of Dutch military at home and abroad has been upheld," Defense Minister Eimert van Middelkoop said after reviewing both reports.
While clearing the three-man interrogation team of torture and the government of a cover-up, the reports said some interrogations could have breached the European Human Rights Convention and the Geneva Convention covering treatment of prisoners of war.
"There was no torture ... but the commission has criticism of the interrogation methods," said Koos Van den Berg, a former lawmaker who led one of the inquiries. "Certainly in at least one interrogation pressure was applied ... and that goes against the rules of international humanitarian law."
The pressure came through keeping the detainee awake with water and noise.
Media reports also said that an electric cattle prod may have been used on at least one detainee, but neither inquiry could find evidence to support the claim, though Van den Berg said he also could not rule it out.
The reports also criticized the government for not giving troops sent to Iraq enough training and for poor coordination between different military units in Iraq.
Just eight people were interrogated by the Dutch in 2003 and only one, a Saudi national who was later killed in fighting near Fallujah, complained of mistreatment.
"We find the use of water was wrong - we find that it overstepped the boundaries of decency, but not of the law," said Irene Michiels of the Oversight Commission of the Intelligence and Security Services, which conducted the second investigation.
The treatment of the Saudi detainee, "may have amounted to humiliating treatment, a breach of article three of the European Convention on Human Rights," said Van den Berg, a former lawmaker who conducted the second report.
Middelkoop said he supported the findings, but added that he would send both to the public prosecutor's office to gauge whether any criminal proceedings were justified.