The UK has been urged to end its “unlawful occupation” of the Chagos Islands by the prime minister of Mauritius, after Britain’s claim to sovereignty over the strategically important islands in the Indian Ocean was comprehensively rejected by the United Nation’s special international maritime court in Hamburg.

The court ruling provides a major headache as the islands represent the UK’s main strategic asset in the Indian Ocean, but a refusal to comply with the judgment will damage Britain’s international reputation for compliance with the law.

The UK retained possession of the Chagos archipelago after Mauritius gained independence in 1968, in effective paying Mauritius more than £4m for the islands. In the early 70s, between 1,500 and 2,000 islanders were forcibly deported so that the largest island, Diego Garcia, could be leased to the US to use as an airbase. They have never been allowed to return. Mauritius has promised to let the US troops remain on a lengthy lease.

The rejection of the UK claim was made by the special chamber of the International Tribunal for the Law of the Sea, which ruled that Mauritius was right to claim the Chagos Islands in line with previous international court rulings.

The judgment also determined that the Maldives could not avoid negotiating its maritime boundaries with Mauritius by saying there was a valid live dispute over the sovereignty of the Chagos Islands between the UK and Mauritius.

In 2019 an advisory opinion by the International Court of Justice, endorsed by the UN general assembly, found the UK in breach of international law by seeking to maintain its claim to the archipelago. The UK ignored the ICJ and the UN opinions, dismissing them as advisory, which prompted Mauritius to go to the international maritime court to press its claim. It did so by asking the maritime court to resolve its separate maritime dispute with the Maldives, the other nearest island to the waters around the archipelago.

The Maldives had tried to fend off the involvement of the maritime court by saying there was an existing sovereignty dispute between the UK and Mauritius over the Chagos Islands, which meant it did not need to negotiate with Mauritius. But by eight votes to one, the maritime court, in a one-hour judgment, ruled in favour of Mauritius, rejecting all the jurisdictional objections the Maldives had raised.

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Speaking after the judgment, Mauritius’s prime minister, Pravind Kumar Jugnauth, said the UK should end its unlawful occupation of the Chagos Islands. “The judgment of the special chamber of the International Tribunal for the Law of the Sea (ITLOS) is clear and unequivocal: Mauritius is sovereign over the Chagos archipelago,” he said.

“The UK must now bring itself into full compliance with international law – it must immediately terminate its unlawful occupation of the Chagos archipelago which the International Court of Justice, and now today ITLOS, have determined to fall exclusively within the sovereignty of Mauritius. The end of UK administration has no implications for the US military base at Diego Garcia, which Mauritius is committed to maintaining.

“In a few days the United Kingdom will assume the presidency of the Security Council, and has announced that the focus of its month-long presidency will be human rights. Given its continuing refusal to allow Mauritius to effectively exercise its sovereignty over the Chagos archipelago, and the former inhabitants of the archipelago to return, we call on the UK to announce, during its presidency, that it will bring itself into compliance with international law.”

Philippe Sands QC, who represented Mauritius in the case, said: “This judgment is damning. It has said near unanimously there is no basis for the UK claim to the islands. The UK has to go away and reflect on what it intends to do, but its current position is untenable.

“The UK has to abandon its own claims and instead use its endeavours to support a resolution of the maritime dispute between Maldives and Mauritius. Above all, it has to abandon its position that it has held since June 2019 that it still has sovereignty over the islands, despite the ruling of the ICJ. The maritime court has ruled that ICJ judgment is legally depositive.

“If the UK persists in its current position it will be knowingly in breach of international law and its reputation damaged in a strategically vital part of the world. The best thing it could do was to facilitate negotiations between Mauritius and the US over the future of the US base,” he said.

Mauritius said ITLOS would now delimit the maritime boundary between Mauritius and Maldives, on the basis that the Chagos archipelago was Mauritius’s territory.