February 25, 2017 0350 GMT
President Abdel-Fattah al-Sisi's government approved the deal and sent it to Parliament for ratification despite the court ruling, which the government has appealed, AP reported on Friday.
The transfer was announced alongside a Saudi aid package, leading critics to condemn it as a land selloff. The government insists the two islands were always part of Saudi Arabia but were placed under Egypt's protection decades ago.
The signing of the agreement in April set off the largest demonstrations of Sisi's two-year rule. The Supreme Administrative Court is set to rule on the agreement on Jan. 16.