The maritime boundary dispute between Kenya and Somalia will now proceed to full trial at the International Court of Justice after the court dismissed Kenya's preliminary objections.
Kenya through AG Githu Muigai had filed two objections that the case filed by Somalia in 2014 be dismissed based on grounds that the ICJ has no jurisdiction to hear the matter.
The other objection filed by the Kenyan government banked on the existing MoU entered between the two countries in 2009 and deposited at the United Nations in 2011 after the matter broke out.
But Judge Ronny Abraham, the court's president, dismissed the two applications setting the stage for the full hearing of the matter that is likely to take years before it is fully determined.
This potentially affects hydrocarbon exploration and exploitation rights Kenya has already granted in the roughly triangular area of contested ocean.
Companies that have been awarded Indian Ocean exploration blocks by Kenya include Tullow, Erin Energy, FAR and Dominion, though it is not clear if their parcels lie within the affected area.
The stretch of sea floor is at an estimated 100,000 square kilometres.
The ruling is a blow to Kenya that had argued that because the country is committed to solving the dispute peacefully, then the case should not proceed to full trial.
Kenya had also argued that the existing MoU between the two neighbouring countries be the determinant on how the matter proceeds.
The Attorney General had argued that the court should only come in if the negotiations based on the MoU fail to bring any solution on the table.
Muigai led delegation of the Kenya's legal team to the Hague based court to defend the Kenyan case in which the government sought to have Somalia's application thrown out.
The ruling now means that Kenya will have to file a response to the dispute before the hearing starts.
Speaking outside the court, Muigai said Kenya would "vigorously prosecute its case" in the upcoming hearings on the demarcation dispute, which have yet to be scheduled.
"Kenya maintains the view that litigation can resolve only one aspect of a wide range of complex issues the parties must agree upon," he said.
Kenya had a central role to play in fighting the maritime security risk from the Al Shabaab Islamist militant group in the pirate-infested waters, Muigai added, and said the court case would not change this.
The other members of Kenya's legal team included ambassador Makena Muchiri, Kenya's High Commissioner to Netherlands, Justa Nkoroi, who is the head of Kenya's International Boundaries Office and Njeri Wachira, the head of international law division at the attorney general's chambers.