The UN's highest court has confirmed that Germany has legal immunity from being sued in foreign courts by victims of Second World War Nazi atrocities.

The International Court of Justice said Italy's Supreme Court violated Germany's sovereignty in 2008 by judging that an Italian civilian, Luigi Ferrini, was entitled to reparations for his deportation to Germany in 1944 to work as a slave labourer in the armaments industry.

Germany argued that the Italian ruling threw into doubt a restitution system put in place after the Nazis' defeat that has seen Germany pay tens of billions of dollars in reparations since the 1950s.

The 15-judge world court said in The Hague in a 12-3 ruling that the Italian case violated Germany's long-standing immunity, which has been recognised in international law, from being sued in national courts.

"The action of Italian courts in denying Germany immunity ... constitutes a breach of the obligation owed by the Italian state to Germany," world court President Hisashi Owada said.

Rulings by the International Court of Justice are final and binding on states.

German representatives argued last year that if the world court sided with Italy, it would open floodgates for restitution claims by individuals around the world, a situation it tried to avoid in negotiating reparation accords with Israel and with countries that had been occupied during the war, and with specific groups such as the Conference on Jewish Material Claims against Germany.

The international court rejected Italy's argument that states' immunity did not apply in cases of war crimes and crimes against humanity committed by one country's army on the territory of another country.

Rome's case was supported by Greece, whose citizens have similar claims against Germany.

In 2008, the Italian court decided on the seizure of Villa Vigoni, a German-Italian cultural centre on Lake Cuomo, to "enforce" the claims by Italians and Greeks seeking compensation.