The UN Human Rights Committee published decisions in two cases involving 25 refugees and asylum seekers who endured years of arbitrary detention in the island nation.
The panel of 18 independent experts found that in both cases Australia violated the rights of migrants, including minors who received insufficient water and healthcare.
"A state party cannot escape its human rights responsibility when outsourcing asylum processing to another state," committee member Mahjoub El Haiba said in a statement.
The UN body called on Australia to provide adequate compensation to the migrants and to take steps to ensure similar violations do not recur.
The committee has no power to compel states to follow its rulings, but its decisions carry reputational weight.
Australia's government said it was considering the committee's views and would give a response "in due course".
"It has been the Australian government's consistent position that Australia does not exercise effective control over regional processing centres," said a spokesperson for the Department of Home Affairs.
"Transferees who are outside of Australia's territory or its effective control do not engage Australia’s international obligations."
Under a hardline policy introduced in 2012, Australia sent thousands of migrants attempting to reach the country by boat to "offshore processing" centres.
They were held in two detention centres -- one on Nauru and another, since shuttered, on Papua New Guinea's Manus Island.
The UN committee rejected Australia's argument that rights abuses that occurred on Nauru did not fall within its jurisdiction.
'Not human rights-free zones'
It highlighted that Australia had arranged for the establishment of Nauru's regional processing centre and contributed to its operation and management.
El Haiba said Australia "had significant control and influence over the regional processing facility in Nauru".
A number of European countries have been examining the possibility of similar arrangements to outsource their migration policies.
Thursday's decisions "send a clear message to all states: Where there is power or effective control, there is responsibility", El Haiba said.
"The outsourcing of operations does not absolve states of accountability. Offshore detention facilities are not human rights-free zones."
The first case examined by the committee involved 24 unaccompanied minors from Iraq, Iran, Afghanistan, Pakistan, Sri Lanka and Myanmar.
They were intercepted at sea by Australia and transferred in 2014 to Nauru's overcrowded Regional Processing Centre.
They were held there "with insufficient water supply and sanitation, high temperatures and humidity, as well as inadequate healthcare", Thursday's statement said.
"Almost all of these minors have suffered from deterioration of physical and mental well-being, including self-harm, depression, kidney problems, insomnia, headaches, memory problems and weight loss."
Vulnerable
Even though all but one of the minors were granted refugee status around September 2014, they remained detained in Nauru, the committee said.
It added that Australia had failed to justify why the minors could not have been transferred to centres on the mainland more suitable for vulnerable individuals.
The committee separately evaluated the case of an Iranian asylum seeker who arrived by boat on Christmas Island with several family members in August 2013 and was transferred seven months later to Nauru.
The woman was recognised as a refugee by Nauru authorities in 2017, but was not released.
In November 2018, she was transferred to Australia for medical reasons, but remained detained in various facilities there, the committee said.
It determined that Australia had failed to show that the woman's prolonged and indefinite detention was justified.
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