A lawyer for the more than 800 people currently being held in immigration detention on Manus Island say they will seek compensation from the Australian government.
It comes after the Supreme Court of Papua New Guinea ruled Australia's detaining of asylum seekers on the island is illegal.
Housing asylum seekers on Manus Island could prove costly for the Australian government, with a lawyer for the 850 men in detention there announcing they will file for compensation.
It follows the ruling by Papua New Guinea's Supreme Court that Australia's practice of sending asylum seekers to a detention centre on PNG's Manus Island is illegal.
A five-man bench of the court declared it breaches the nation's constitution, by depriving the detainees of their "personal liberty" or freedom.
Lawyer for the detainees, Ben Lomai, says some of the men could be entitled to hundreds of thousands of dollars.
"Under the arrangement (the) Australian government is obligated to pay for the cost, and that includes the cost of maintaining the offshore processing here, the processing centre, including the wellbeing of the asylum seekers. In my view that should also include any other costs such as the legal costs - compensation claims, etc. If we get the order for compensation we will be looking at an order to enforce that against the Australian government."
The court's decision has met with a frosty reception from the Australian government, with Immigration Minister Peter Dutton insisting it will have little effect on Australia's controversial border protection policies.
He says the detainees won't be coming to Australia.
"These people are not going to settle in Australia. We are not going to allow the people smugglers to get back into business because 1,200 people drowned at sea when Labor lost control of our borders and 50,000 people arrived on 800 boats. We are not going to return to those days of dysfunction and the surrender of our sovereignty when it comes to securing our borders."
However the Human Rights Law Centre's Daniel Webb has told the ABC the government will have to do something.
"What the court has said, five judges of the PNG Supreme Court, have said, (is) all of these men, for the last three years, you've been locking them up illegally against their most fundamental of rights: fix it, release them. Maybe the gates don't fly open tonight, maybe they're not all removed from Manus tomorrow, but at some stage very soon something fundamental about those arrangements must change."
The Manus centre was re-opened in 2012 by the Gillard Labor government, and in 2014 PNG agreed to amend its constitution on the issue of personal liberty, allowing it to hold people in the facility.
This has also been ruled as against the law.
Immigration spokesman for Labor, Richard Marles, has told the ABC Mr Dutton needs to have urgent talks with PNG.
"I think the critical thing now is Peter Dutton needs to be on a plane tomorrow, literally tomorrow, to speak with his counterpart in PNG firstly about how the government is seeing this decision, and how negotiations can be undertaken to see these facilities operate within the context of this decision."
What will happen now to the detainees is unclear.
Some experts have speculated that the Australian government might now attempt to get around the ruling, by turning Manus into an open facility like the centre on Nauru.
Lawyer Loani Henao, acting for former PNG opposition leader Belden Namah who lodged the case, says only time will tell.
"As to whether the asylum seekers are going to be transferred back to Australia, or back to their home countries or back to Nauru or anywhere else, that's really a matter for both the governments of Australia and PNG. One thing is for (certain). They had better begin to demonstrate that they are taking steps to give full effect to the orders of the Supreme Court."
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