The first part of Thursday's ICC ruling was expected as the war crimes court has consistently rejected arguments put forward by the South African government, namely that it could not arrest Bashir because visiting heads of state at the African Union Summit held in the country enjoyed diplomatic immunity.
ICC judges said that heads of state or government clearly fall under the court's jurisdiction and cannot be exempted at home or abroad, echoing the conclusion of a South African domestic court.
The second stage of the ruling was surprising as it was the first time the ICC found one of its members had defied its rules, yet took no action by reporting South Africa to the U.N. Security Council or ICC member states for possible censure.
"The decision is something of an indictment of the U.N. Security Council and the (ICC's) Assembly of State Parties,” ICC expert and legal scholar Mark Kersten told Reuters.
Presiding Judge Cuno Tarfusser, reading a summary of the ruling, noted that past referrals of countries to the Security Council for noncompliance were "futile" in terms of leading to further action and also "not an effective way to obtain cooperation" with the ICC.
Bashir denies wrongdoing and has rejected ICC jurisdiction. It was the Security Council itself that referred Sudan's case to the ICC in 2005.
"It is shocking that other (ICC member states) such as Jordan are also failing in their obligations to arrest Bashir, and this decision makes it clear they do so in flagrant violation of international law," Amnesty International said in a statement.
The ICC's decision not to refer South Africa might also be intended in part to dissuade it from pulling out of the court.
In February, the African Union called for member states to leave the ICC over a perceived bias by prosecutors in focusing on African conflicts.
Kenya, Namibia, Burundi and South Africa have threatened to ditch the ICC and Pretoria began the formal withdrawal process last year before being blocked by a domestic court for not getting parliament's approval first before pulling out.
"I believe (Thursday's) ruling will raise the costs of withdrawal for South African President Jacob Zuma," Kersten said.
In The Hague, South African Ambassador Bruce Koloane said that for the time being "(we are) still a member effectively of the ICC, we still have to honour all our obligations”.
Pretoria's foreign affairs department said the government would study the ruling "and its implications and seek legal opinion on available options".
Siphosezwe Masango, who chairs parliament's international relations committee, said he remained convinced South Africa was right not to arrest Bashir, "a sitting head of state".
Pretoria's main opposition party, the Democratic Alliance, said the ICC ruling was an indictment of Zuma's ANC government, noting it had upheld the domestic court's position.
"The ANC seems intent on relegating South Africa to the status of a scumbag nation which protects the law-breakers and corrupter of this world," DA Federal Executive Chairperson James Selfe said.