Pakistan's Supreme Court rejected the prime minister's appeal against a summons in a contempt case on Friday and is set to charge him on Monday, a move likely to bring fresh political turmoil to the chronically unstable country.
If convicted, Yusuf Raza Gilani could be forced to step down and face up to six months in jail. The case, which has raised tension between Pakistan's civilian leaders and the Supreme Court, could drag on and paralyse decision-making.
The appeal is dismissed, Chief Justice Iftikhar Chaudhry said in court, reading the decision of the eight-member bench.
If Gilani is removed, it does not necessarily mean the government will fall as the ruling coalition has the numbers in parliament to elect a replacement.
But a protracted court battle could weaken the administration and damage the ruling Pakistan People's Party's chances in the next general election expected by 2013.
Political instability and brinksmanship often distract Pakistani leaders from a staggering number of challenges -- from a Taliban insurgency to rampant poverty.
Analysts have expressed concern about a possible balance of payments crisis in Pakistan amid a growing current account deficit, which is likely to worsen in coming months as repayments on IMF loans begin in February.
While Pakistanis have grown accustomed to hostility between civilian leaders and generals, the Supreme Court has increasingly asserted itself over the last few years, making the political landscape more combustible.
I think this is definitely a setback to the system. The government's performance was already affected by its confrontation with the military, said Talat Masood, a retired general and political analyst.
The legal tussle stems from thousands of old corruption cases thrown out in 2007 by a controversial amnesty law passed under former military ruler and president Pervez Musharraf.
The contempt accusation arises from Gilani and his advisers ignoring court orders to ask Swiss authorities to re-open money laundering cases against President Asif Ali Zardari, the most prominent beneficiary of the law.
Pakistan's current government is the longest serving civilian administration in the country's history.
It hopes to be the first to serve out its full term in the South Asian nation which has been ruled by the military for more than half of its 64-year history through coups, or from behind the scenes.
(Additional reporting by Rebecca Conway; Writing by Michael Georgy and Ed Lane)