"We hold that the government has not shown a likelihood of success on the merits of its appeal, nor has it shown that failure to enter a stay would cause irreparable injury, and we therefore deny its emergency motion for a stay," the judges said in the unanimous order.
"The government has pointed to no evidence that any alien from any of the countries named in the order has perpetrated a terrorist attack in the United States," the three-judge bench of the 9th US Circuit Court of Appeals here said, making it clear that they would not block a ruling by a Seattle court that halted Trump's executive order.
The judgment means that citizens of seven majority-Muslim countries will continue to be able to travel to the US.
"Rather than present evidence to explain the need for the executive order, the government has taken the position that we must not review its decision at all. We disagree," the judges wrote.
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"In short, although courts owe considerable deference to the President's policy determinations with respect to immigration and national security, it is beyond question that the federal judiciary retains the authority to adjudicate constitutional challenges to executive action," they said.
Trump responded with an angry tweet saying national security was at risk and there would be a legal challenge.
"SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!" he wrote, indicating that he is deeply disappointed with the court's decision.
The Trump Administration had reached out to the court, requesting it to lift the halt on the implementation of its executive order that was ordered by a federal court in Seattle after an appeal filed by the Washington state.
During an interaction with reporters after the judgment, Trump described the ruling as a 'political decision'.
"It's a political decision, and we're going to see them in court. This is just a decision that came down, but we're going to win the case," Trump said.
Trump's political opponents and rights activists immediately celebrated the court verdict.
"The Constitution wins," said Indian-American Congresswoman Pramila Jayapal, who is one of the leading Democratic lawmakers fighting Trump's executive order.
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