U.S. President Donald Trump’s administration, which was consulted, gave its approval, but finalizing the deal was delayed by last-minute negotiations over costs.
The agreement was due to be signed by British Prime Minister Keir Starmer and Mauritian leader Navin Ramgoolam at a virtual ceremony on Thursday morning.
But a High Court judge granted an injunction in the early hours of Thursday, putting a hold on the agreement. It came in response to a claim by two Chagossian women representing the islands' original residents, who were evicted decades ago to make way for the American base.
Bernadette Dugasse and Bertrice Pompe, both British citizens, fear it will become even harder to return once Mauritius takes control of the islands.
High Court judge Julian Goose temporarily blocked the British government from taking any “conclusive or legally binding step to conclude its negotiations concerning the possible transfer of the British Indian Ocean Territory, also known as the Chagos Archipelago, to a foreign government.”
“The defendant is to maintain the jurisdiction of the United Kingdom over the British Indian Ocean Territory until further order," he said.
Another court hearing is set for 10:30 a.m. (0930GMT).
“We do not comment on ongoing legal cases," the British government said. "This deal is the right thing to protect the British people and our national security.”
One of the last remnants of the British Empire, the Chagos Islands have been under British control since 1814. Britain split the islands away from Mauritius, a former British colony, in 1965, three years before Mauritius gained independence.
Britain evicted as many as 2,000 people from the islands in the 1960s and 1970s so the U.S. military could build the Diego Garcia base, which has supported U.S. military operations from Vietnam to Iraq and Afghanistan.
Displaced Chagossians fought unsuccessfully in U.K. courts for years for the right to go home. Under the deal, a resettlement fund would be created to help displaced islanders move back to the islands, apart from Diego Garcia. Details of any such measures remain unclear.
Mauritius has long contested Britain's claim to the archipelago and in recent years the United Nations and its top court have urged Britain to return the Chagos to Mauritius, around 2,100 kilometers (1,250 miles) southwest of the islands.
Britain agreed to do so in a draft deal in October, but that was delayed by a change of government in Mauritius and reported quarrels over how much the U.K. should pay to lease the base.
The U.K.’s opposition Conservatives have criticized the deal, accusing the government of surrendering sovereignty over a British territory.