Gillard has signed a refugee-swap deal with Malaysia to challenge perceptions her government is soft on the issue of asylum seekers and raise her support with voters, who would throw her from office if an election was held now.
Lawyers representing a group of boatpeople who were due to be deported later on Monday, the first under Gillard's deal, argued in the High Court of Australia that the government did not have the legal power to send them to Malaysia.
"There is a sufficiently serious question to be tried," said High Court Judge Kenneth Hayne in referring the case to a full bench of the court, which will sit on August 22. The injunction would be extended until a final ruling was made, he said.
The Malaysia deal is the second attempt by Gillard to have an Asian nation take boatpeople, having announced earlier that East Timor had agreed to such a deal only to have it rejected by the East Timorese parliament.
A second failure by Gillard to achieve a regional agreement would further strengthen voter perceptions her Labor government, already struggling in opinion polls, is inept on policy and unable to deliver on major promises.
Asylum seekers are a long-running political flashpoint in Australia, splitting voters and helping swing the outcomes of past elections, despite the country receiving just under 0.5 percent of the world's refugee hopefuls, according to U.N. data.
AMNESTY WELCOMES INJUNCTION
Under the Malaysia deal, Australia would to Malaysia send 800 asylum seekers who arrive by boat, to have their refugee claims processed there. In return, Australia will accept 4,800 people from Malaysia who have been granted refugee status.
The government had wanted to send the first 16 men to Malaysia on Monday. They were from a refugee boat which arrived late last week with 54 people on board, including 19 children, with 14 of those children unaccompanied by an adult.
Lawyers for the boatpeople argued that it was illegal to send people to a country that was not a signatory to international laws protecting human rights.
"Today's High Court decision vindicates Amnesty International's stance that the Malaysia deal is inhumane, inappropriate and potentially illegal under Australian and international law," said Amnesty International's refugee spokesman Graham Thom.
Amnesty said it had documented numerous human rights violations faced by asylum seekers in Malaysia including caning, arbitrary detention, labor exploitation and sexual abuse.
"This deal is not punishing people smugglers, it is punishing children. The (Australian immigration) minister as their legal guardian is supposed to act in the best interest of unaccompanied children, not send them to face serious abuse in the slums of Kuala Lumpur," said Thom.
The High Court case was launched on behalf of a group of about 40 asylum seekers including some children.
Human rights activist Frank Breannan said the last major immigration case heard by the High Court took six to eight months to resolve. "I think the High Court would move much more quickly this time, but it would definitely take some weeks after the 22nd of August for a final decision," he said.
The government said earlier that it expected legal challenges to the deal, and was undeterred in pushing ahead with the so-called "Malaysia Solution" agreement, which could be followed by other pacts with Australia's regional neighbors.
The Malaysia deal follows violence and protests at detention centers, including the main processing center on Christmas Island in the Indian Ocean, which is full.
The government says the scheme is aimed at breaking the business model of people-smugglers who run the often ramshackle boats, which mainly leave from Indonesia.
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