A Cairo court on Wednesday acquitted 22 people accused of illegally protesting Egypt's plan to hand two strategic Red Sea islands over to Saudi Arabia.

The verdict came one day after an administrative court declared the Egyptian-Saudi deal "null and void," dealing a major blow to President Abdel-Fattah al-Sissi on one of the most controversial issues he's faced since taking office.

The 22 defendants had been arrested on April 15 during mass protests against the handover of the islands of Tiran and Sanafir, which had been quietly announced during a visit to Cairo by Saudi King Salman earlier that month.

The protests were among the largest non-Islamist demonstrations against al-Sissi's administration in two years, defying a 2013 law that effectively bans protests.

The court noted that holding protests does not violate the constitution, an argument repeatedly invoked by opponents of the protest law.

It also found that the defendants had been arbitrarily arrested and did not riot. The verdict can be appealed by prosecutors.

The ruling comes after some 98 alleged protesters in two related cases saw their sentences voided or reduced to fines in appeal judgements in recent weeks.

The administrative court ruling voiding the handover deal would also help defendants in other cases, although it would not be binding on criminal courts, lawyer Khaled Ali, who took the case against the agreement, said on Wednesday.

Ali told a press conference that while he had brought atlases and historic government documents to court to argue his case that the islands were historically sovereign Egyptian territory, the government side had not presented any documents.

"What we want today is a transparent government. Maybe in the next round in court we’ll be able to make them produce documents," Ali said.

The government has lodged an appeal which is expected to be heard by the Supreme Administrative Court.

Opposition activists have accused the government of "selling" Egyptian territory in return for billions of dollars of aid and financing provided by Saudi Arabia since al-Sissi - then the army chief - ousted Islamist president Mohammed Morsi in 2013.

The government says that a joint commission of experts found that the two islands were historically Saudi territory. However, the administrative court accepted Ali's argument that his documentation proved Egypt had exerted sovereignty over them.

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