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The Dutch state is liable for the deaths of three Bosnian Muslim men who were expelled from a UN compound at Srebrenica in 1995 and subsequently murdered, the supreme court ruled Friday.
"The (appeals) court decision is upheld," Judge Floris Bakels said, ruling that it would be "unacceptable" for countries not to be able to judge their peacekeeping troops.
Relatives of the victims broke down in tears and hugged each other and their lawyers after the verdict was read out.
The final ruling in the long-running case means that former UN interpreter Hasan Nuhanovic, whose father, mother and brother were killed by Bosnian Serb forces after Dutch peacekeepers expelled them from the UN base, can seek compensation from the Dutch state.
The ruling also applies to relatives of another worker on the base, electrician Rizo Mustafic, who was also killed after being sent to certain death at the hands of Bosnian Serb forces.
Nuhanovic's mother, Nasiha, was killed although her death was not part of the current case, in which the Dutch state argued that the peacekeeping troops were under UN responsibility.
But, said Judge Bakels, clearing the Dutch state of responsibility would mean that "justice would have almost no way to judge armed interventions."
"That would be unacceptable," he said.
The three men at the centre of the case were among almost 8,000 Muslim men and boys slaughtered by troops commanded by Bosnian Serb general Ratko Mladic, who brushed aside lightly armed Dutch peacekeepers and overran the supposedly safe enclave in July 1995, during Bosnia's brutal three-year civil war.
Friday's hearing was the culmination of a case spanning a decade, lodged in 2003 by Nuhanovic and Mustafic's relatives, who claim the three men -- who all worked on the Dutch battalion (Dutchbat) base -- could have been saved in what became Europe's worst massacre since World War II.
Rizo Mustafic's daughter, Alma, who lived through Srebrenica as a 14-year-old, told AFP she was "very relieved" by the ruling.
"It's always very difficult to grieve, but I hope this decision will help us," a visibly emotional Mustafic said.
Hasan Nuhanovic, who spearheaded the legal battle over the last decade, told AFP after Friday's ruling: "It's great, it's really great."
"It's too early to completely describe my feelings right now," he added.
A Dutch appeals court in 2011 found the Dutch state responsible for the trio's deaths, the first time it was held accountable for the Dutch UN battalion's actions.
But the Dutch state then appealed, saying it believed the UN-controlled Dutchbat soldiers in Bosnia.
Mladic, dubbed the "Butcher of Bosnia", and former Bosnian Serb political chief Radovan Karadzic are currently facing charges of genocide, war crimes and crimes against humanity before the Yugoslav war crimes court in The Hague.
Munira Subasic, head of the Mothers of Srebrenica that represents widows of victims, congratulated the judges and said the verdict was "encouraging news."
"The verdict is a green light that we will eventually get satisfactory justice," she told AFP.
"The Dutch state is responsible for all the victims," she added.
The Mothers of Srebrenica filed a lawsuit in October last year against the UN and the Dutch state before the European Court of Human Rights (ECHR), accusing them of negligence by failing to protect victims.
Nuhanovic said that Friday's judgement was but "one of the battles being fought."
"There are still many battles to be fought in Bosnia, hundreds of war criminals still roam the streets," he said.
"The man who ordered my mother's killing works in the same building as me. I have to live with this every day," Nuhanovic said.