The High Court has found the government didn't act illegally when it detained 157 Tamil asylum seekers aboard a Customs boat for almost a month.
The court has also ruled they are not entitled to damages.
The case was mounted by a Tamil Christian man named only as CPCF who was aboard the vessel which departed India and was intercepted off Christmas Island on June 29.
Those on the boat were held aboard the Customs vessel Ocean Protector as the government sought to arrange their return to India. They were subsequently sent to Nauru.
A majority of High Court judges held that the claim for damages for false imprisonment from their detention at sea should be dismissed.
They ruled that the Commonwealth Maritime Powers Act authorised a maritime officer to detain CPCF for the purpose of taking him back to India.
There was no obligation to afford him procedural fairness.
CPCF's detention was also legal even though there was no agreement with India for his return.
Hugh de Kretser, of the Human Rights Law Centre, said their client, who is in detention on Nauru, was sad and disappointed by the decision.
"It's a decision of the narrowest of margins," he told reporters in Melbourne.
Wednesday's decision effectively ended the case, but it had been important in bringing legal scrutiny and transparency to the government's actions, he said.
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