The court has overturned the ban on people living in the outer region of the Chagos Archipelago.
In February, nine people, including four Chagossians, landed on Ile Du Coin, an uninhabited outer island 135 meters south of Diego Garcia.
They were ordered to leave, and four members of the group took legal action against the commissioner of the British Indian Ocean Territory (BIOT).
It has been argued that a 2004 law removing the right of Chagossians to enter and live on the outer islands is unlawful.
In its decision on Tuesday, the BIOT Supreme Court overturned the commissioner’s regulations and orders for the Chagossians to leave.
England has agreed handed over sovereignty of the Indian Ocean islands to Mauritiusand lease back the joint UK-US military base at Diego Garcia for 99 years.
US President Donald Trump was highly critical of the deal in Februarydescribed it as “a very stupid act” and “big mistake”.
James Lewis KC, chief judge of BIOT, said on Tuesday: “Any rational reason for passing such provisions has now been lost, if it ever existed.”
The Chagossians initially claimed they wanted to visit Ile Du Coin temporarily to visit the cemetery, and did not mention that they planned to set up a “permanent camp”, the judge said.
He continued: “The claimed power to exclude entire populations must be justified by legal sources, not by administrative necessity.”
The judge also said that the agreement signed between the UK and Mauritius “removes any purported reliance on defense or security issues in repopulating the outer islands, as well as rendering the issue of funding superfluous. [serving no practical purpose]”.
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The commissioner opposed the decision, according to the Ministry of Foreign Affairs.
A Foreign Ministry spokesperson said: “We disagree with this decision, and we understand that the BIOT administration has appealed.”
Meanwhile, the Conservative Party accused Mr Keir Starmer treating the Chagossians as an “inconvenience.”
Shadow foreign secretary Mrs Priti Patel has called on the prime minister to cancel what he described as a “horrific” deal to return the Chagos Islands to Mauritius, which he said was a “complete betrayal”.
Ms Patel said: “Throughout this process, he has sought to sideline the Chagossian people, treating them as little more than an inconvenience.
“Chagossians, many of whom did not want to see the islands handed over to China’s allies, finally took matters into their own hands. And now this latest insult further weakens the Government’s case.”
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