Voters will go to the polls on January 14 after the Supreme Court found a political powerplay to dismiss the last government was constitutional.
It will be the third election in four years for the notoriously politically instable Pacific nation.
Faced with a no-confidence motion in November, the Charlot Salwai-led government recommended to President Nikenike Vurobaravu that he instead dissolve parliament, who accepted.
A clutch of 28 opposition MPs challenged that call in court, including opposition leader Gracia Shaddrack and former prime ministers Bob Loughman and Ishmael Kalsakau.
They argued Mr Vurobaravu had a conflict of interest in ending the parliamentary term early, which also "breached natural justice" by "denying the electoral college the right to deliberate and vote", and may not have followed strict procedure.
While they argued MPs should be put back in their positions for the no-confidence motion, Supreme Court Chief Justice Vincent Lunabek found otherwise.
The judgment states that while Mr Vurobaravu sidestepped past norms when dissolving parliament - such as consultation with political parties and church leaders - he did so legally, noting his "wide and extensive discretion" in the constitution.
Mr Lunabek also ordered the MPs behind the challenge pay costs to the respondents - the president, prime minister and speaker - of 250,000 Vanuatu vatu ($A3200).
Those funds are due to be paid before the election.
It is not yet clear whether the 28 MPs intend to appeal the decision.
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