The ruling by the Supreme Court found that hundreds of asylum seekers detained for years on Manus Island had the right to sue the Papua New Guinea government for compensation, saying their human rights had been violated.
In handing down their decision, the judges rejected an attempt by the PNG government to block claims from asylum seekers being heard.
“The finding opens the way to major compensation and also for consequential orders against both the PNG and Australian governments,” advocacy group the Refugee Action Coalition said.
Under Australia’s strict immigration policy, asylum seekers arriving by boat are sent to offshore detention centerson Manus and the Pacific island of Nauru until their claims are processed.
Human rights groups and the United Nations have strongly criticized the squalid conditions in both facilities. Last year, the PNG Supreme Court declared the Manus camp illegal and asked the Australian government to shut it down.
Hundreds of men housed at the Manus facility protested against government attempts to clear them from the camp
The asylum seekers are due to go back to court in February to seek orders from the governments of Australia and PNG for them to be settled in a third, safe country.
“It is a major legal victory for the asylum seekers on Manus Island. This will cost the Australian government politically and financially,” Refugee Action Coalition spokesman Ian Rintoul told the German press agency dpa.
The PNG court decision came as the United States announced it would accept a further 200 refugees from Manus and Nauru as part of an agreement between the Obama administration and Australia.
Under that deal, the US agreed to take up to 1,250 of the refugees from the island camps, but slow processing of asylum applications has meant that so far only 50 people have been resettled.
New Zealand has also offered to take some of the men.
nm/ng (Reuters, dpa)