Three Malaysian transgender women have won their landmark bid to overturn an Islamic anti-cross-dressing law in the Muslim-majority nation.

A three-judge appeals court panel ruled on Friday that a state provision barring Muslim men from dressing as women was unconstitutional, saying it "deprives the appellants of the right to live with dignity".

"It has the effect of denying the appellants and other sufferers of GID (Gender Identify Disorder) to move freely in public places... This is degrading, oppressive and inhuman," judge Hishamudin Yunus said.

The verdict overturns a 2012 lower court ruling, which had dismissed the challenge by the three appellants - Muslims who were born male but identify as women - over their arrest four years ago under the law in southern Negri Sembilan state.

Malaysia has a double track court system with state Islamic laws governing civil matters for Muslims, who account for 60 percent of the country's 30 million people.

Under state Islamic laws, men dressing or acting as women is punishable by up to three years in jail. Some Malaysian states also outlaw cross-dressing by women.

Aston Paiva, the plaintiffs' lawyer, said the ruling could be used to challenge any arrest of transgender people throughout Malaysia.

"It's quite historic... This will be a precedent... This court binds all other high courts," Paiva said.

Speaking to Al Jazeera, Nisha Ayub, an Advocacy Manager at Justice for Sisters, an activist group for the transgender community in Malaysia, described the case as "a historical moment for everyone in Malaysia in regards to gender identity".

"This has never happened in Malaysia, no one has ever challenged the Sharia law. We could use this case as an example for us to challenge other cases in Malaysia itself," Ayub said.

Constant harassment

The state's Islamic Religious Department could still appeal the ruling at the top Federal Court, although it wasn't immediately clear if it plans to do so.

Human Rights Watch calls Malaysia one of the world's worst countries for transgender people, as they face constant harassment, sexual abuse and arrest by the authorities.

Since the 1980s, every state has passed criminal enactments that institutionalise discrimination against transgender people, according to the New York-based watchdog.

Figures for how many people have been arrested and sentenced under the law are hard to come by, but Human Rights Watch said it interviewed transgender women who said they had been jailed from four months to three years.

Several of them were placed in male wards, where they face sexual assault from both guards and other prisoners, it said.

Most recently, 16 transgender women were arrested at a wedding party on June 8.

Source: Agencies