"The Attorney-General has refused to grant this consent, as continuation of the proceedings would be in breach of domestic law and Australia ’s obligations under international law," his spokesman said.
He cited Australia 's obligations under international law extending immunity to visiting heads of state.
"Those immunities include personal inviolability including from any form of arrest or detention and immunity from the criminal jurisdiction of the receiving state," said the spokesman.
Jegatheeswaran's lawyer, Lucien Richter, had earlier said he did not believe diplomatic immunity was an issue in this case.
"There is some authority to suggest that where crimes are of a substantial and international nature, such as war crimes or crimes against humanity, then effectively the authority of being head of state doesn't grant him immunity from those things," he said.
"Certainly the ICJ (International Commission of Jurists) in their submission have come to a simple conclusion that immunity would not be a barrier to this prosecution."
Australian police are reviewing a dossier submitted by the ICJ containing testimony from citizens who say they were attacked by government forces in the war's final days.
Jegatheeswaran, 63, an ethnic Tamil, returned to his homeland in 2007 to volunteer in Tamil hospitals, schools and camps for displaced persons, where he claims to have witnessed attacks by government forces.
Rajapakse's office said the attempt to lodge a case in Australia was "hilarious".
"It's hilarious to file charges against a head of state who has defeated terrorism in Sri Lanka ," his spokesman Bandula Jayasekera said.
Director of Rajapakse's Policy Research and Information Unit Lucien Rajakarunanayake said Sri Lanka expected Australia to extend full immunity to the visiting president.
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