The Oslo court said on Monday that it would not handle Snowden's lawsuit, which the former NSA worker filed in April as a way of seeking a guarantee that he will not be extradited if he visits the Norwegian capital to accept an award.
The Norwegian branch of the PEN Club has invited Snowden, who has been living in exile in Russia since 2013 after revealing widespread US foreign surveillance, to collect the Ossietzky prize for freedom of expression in November.
PEN said a law firm had filed a petition with Oslo City Court "in order to allow Snowden to travel to Norway without fear of extradition to the US, where he faces decades of imprisonment under the Espionage Act".
"We will do our utmost to ensure that Snowden may receive the prize in person," it said in a statement.
The state attorney's office filed a request with the Oslo District Court in May to reject the lawsuit, saying that Snowden's case is criminal rather than civil in nature and should therefore be tried as such – which would only be possible should an extradition request be received.
The court agreed with that interpretation on Monday, rejecting the lawsuit. The court also ruled that Snowden pay 7,000 kroner to the state to cover the legal costs of handling his request.
The 32-year-old American was charged by US authorities with espionage and the theft of state secrets after revealing the extent of surveillance programmes run by the National Security Agency.
Considered a whistleblower by some and a traitor by others, Snowden won a similar Norwegian award last year.
He was unable to collect it in person after he failed to receive assurances that he would not be arrested and extradited to the United States.
Snowden has also been nominated again for this year's Nobel Peace Prize, which will be announced in October.
The whistleblower will make an appearance via satellite on Tuesday at Denmark's Roskilde Festival.