The International Criminal Court's chief prosecutor met Libyan officials in Tripoli on Wednesday where they reiterated that Muammar Gaddafi's detained son would be tried at home, despite calls by the Hague-based court to hand him over.
The ICC issued an arrest warrant for Saif al-Islam last year, after prosecutors accused him and others of involvement in the killing of protesters during the revolt that eventually toppled his father.
The Libyan government itself failed this week to convince the former fighters who have held Saif al-Islam in the town of Zintan since his November capture to turn him over to their custody.
They believe they can do it, it's not my call. The decision here is for the judges, not for me, ICC chief prosecutor Luis Moreno-Ocampo told Reuters in an interview.
Moreno-Ocampo said he met various officials including the chairman of the ruling National Transitional Council (NTC) and the prosecutor-general, who told him Saif al-Islam was in good condition.
NTC Chairman Mustafa Abdel Jalil said Libya would take the necessary steps to show it was capable of trying him.
We are confident that the (ICC) court and its judges will understand our position and the aspirations of the Libyan people, Abdel Jalil told reporters.
A U.N. Security Council Resolution obliges Libya to cooperate with the court, the ICC says, and Tripoli's failure to hand him over could result in it being reported to the Council.
Saif al-Islam faces the death penalty if found guilty by a Libyan court, or a prison term if convicted by the ICC.
The legal system here is okay... The fact that we are discussing how to do justice - if the Libyans do it or the ICC does it - shows that the case is moving, Moreno-Ocampo said.
One year ago it was a mess, today we are discussing legal issues, we are organising, everything is different.
The human rights group Amnesty International has questioned whether the Libyan justice system can meet the standards of international law.
The ICC this month rejected Libya's request to postpone handing over Saif al-Islam to face war-crimes charges. It ordered Tripoli to comply with its obligations to enforce the warrant of arrest and surrender him without delay.
Libya has appealed the decision and will be presenting a challenge to the admissibility of the case to the Hague.
The government meanwhile remains in deadlock with the Zintan fighters. An NTC delegation travelled on Monday to the town, 160 km (100 miles) west of Tripoli, to try to broker a deal but left empty-handed.
Local council spokesman Khaled Ahmed al-Zintani said fighters in Zintan believe the government cannot secure Saif al-Islam and are worried he would escape if brought to the capital.
He said they called for tighter security in Tripoli before any eventual transfer, as well as salaries for their efforts.
We want the government to provide financial support for those who have been protecting Saif. It's their right, Zintani told Reuters.
Some Zintan officials have also called for Saif al-Islam to be tried in their straggling mountain town.
Moreno-Ocampo said he would also travel to Misrata in a show of respect for the suffering endured in the coastal city which saw some of the heaviest fighting of the war. He said the ICC was looking into gender crimes committed during the conflict.
In May, he will present a report to the U.N. Security Council on Libya.
Libya is not just an example for the Arab world, Libya is an example for the whole world. The world is learning that justice is relevant, Moreno-Ocampo said.
The bottom line is that there will justice for Saif al-Islam.
(Additional reporting by Ali Shuaib; Writing by Marie-Louise Gumuchian and Hadeel Al-Shalchi; Editing by Michael Roddy)