It has decided Yingluck Shinawatra still holds the position of prime minister after she dissolved the House of Representatives.
She therefore has to remain in office until a new government takes office, the court ruled at 12.45pm on Wednesday.
The ruling is the first of the three points the court has considered.
The next point to be announced is whether the transfer of Mr Thawil was unconstitutional. If so, Ms Yingluck would have to leave office.
The third is whether all or some members of the cabinet would have to leave office as well after Ms Yingluck does.