Papua New Guinea's Supreme Court has rejected an application by a group of refugees and asylum seekers from Manus Island who sought to be taken to Australia.
That application was dismissed on a technicality and follows an earlier PNG Supreme Court ruling which found holding people on Manus breached their constitutional right to personal liberty and was thus illegal.
News.com.au said had it succeeded, Australia could have been ordered to take away 302 asylum seekers transferred to Manus Island under the former Labor government's "Pacific solution".
The case was apparently rejected because court filing documents were signed by the group's main lawyer rather than the actual claimants.
The lawyers now plan to return to Manus to collect the signatures they need to relaunch the application, Reuters reports.
The Australian government has repeatedly declared that none of those on Manus or Nauru, who sought to reach Australia aboard people smuggler boats from Indonesia, will be allowed to settle in Australia.
So far no third country has been found willing to accept any of the detainees. New Zealand has been mentioned as a possibility, as has Costa Rica in Central America.
In September, the Immigration Minister Peter Dutton said the government was continuing negotiations with unspecified third countries to settle those on Nauru and Manus.
"We remain engaged with several countries to alleviate these issues but negotiations will necessarily be protracted," he said.
The government says any relaxation would lead to an immediate resumption of people smuggler boats heading south from Indonesia.
However, the case has raised hopes from some in PNG that they will finally reach Australia.
Abdul Aziz, 24, who fled Sudan in the bloody civil war, told Reuters he was optimistic he would finally be sent to Australia.
"We are keeping our fingers crossed. We sought asylum from Australia, not PNG," he said.
Residents of the Manus Island processing centre queue for food. Photo: Behrouz Boochani