An Egyptian court ruled on Sunday that a controversial deal to hand over two strategic Red Sea islands to Saudi Arabia can go forward, voiding an earlier ruling that blocked the transfer.

The Court of Urgent Matters ruled against a verdict of the High Administrative Court in January that halted the handover of the uninhabited islands of Tiran and Sanafir to Riyadh, Egyptian state television reported on its website.

The urgent matters court ruled "in favour of disregarding the ruling of the high administrative court", as "the judiciary doesn't have the authority to interfere with matters of sovereignty", Ashraf Farahat, the lawyer who filed the latest lawsuit, said.

Sunday's decision is subject to appeal and any final deal must be approved by parliament.

The court's ruling comes amid signs that bilateral relations between the two countries are warming after months of tension.

Egyptian President Abdel Fattah el-Sisi and Saudi Arabia's King Salman met in Jordan last week, on the sidelines of the Arab League Summit.

The territorial deal, announced in April 2016, caused public outrage among many Egyptians who said the islands belong to their country.

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Saudi and Egyptian officials had argued that the agreement sets out a sea boundary between the two countries and insists that the islands were originally Saudi territory, having only come under Egyptian control in the 1950s when Riyadh asked Cairo to protect them.

Lawyers who have opposed the accord, however, have contended that Egypt's sovereignty over the islands dates back to a treaty in 1906, before Saudi Arabia was founded.

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The islands at the mouth of the Gulf of Aqaba control the narrow shipping lanes running north to the Red Sea port cities of Eilat and Aqaba, in Israel and Jordan.

Al Jazeera's Middle East analyst Yehia Ghanem said the location of islands has great strategic and maritime value.

According to Ghanem, since the 1950s there has been a lot of pressure by Israel and the US on Saudi Arabia to challenge the sovereignty of the islands because "in case the Saudis have control over the island [of Tiran] it becomes an international strait so Egypt cannot at any point block out Israel's maritime passage through the strait".

The fate of the two islands has been at the heart of friction between Riyadh and Cairo over a string of regional issues, including Syria and Yemen.