The award came just days after President Donald Trump's administration announced sweeping new sanctions on the ICC as part of its campaign to dismantle the tribunal over investigations into the United States and its allies, including Israel.
"The European Union is built on respect for multilateralism and international institutions, and this prize recognises the important work of the court in upholding international law and justice," European Parliament President Roberta Metsola said at the parliament in Strasbourg, France, after a standing ovation.
The annual EU award, named after Soviet dissident and Nobel Peace Prize laureate Andrei Sakharov, was created in 1988 to honour individuals or groups who defend human rights and basic freedoms.
ICC President Tomoko Akane of Japan welcomed the award, saying it "comes at a time when the court and its officials face unprecedented challenges".
"Against this backdrop, the Sakharov Prize carries particular significance, reaffirming the importance of independent judicial institutions and of those who work to uphold international law," she said in a statement.
The ICC opened in 2002 as a court of last resort to prosecute senior leaders it deems responsible for crimes that, according to its founding treaty, "deeply shock the conscience of humanity".
It has jurisdiction over war crimes, crimes against humanity, genocide and the crime of aggression.
The Trump administration's sanctions cut off the court from US-based financial services, technology companies and even using US dollars.
They set a six-month timeline for US companies and individuals that have business with the court to wind that business down.
The winner is chosen by the European Parliament's president and top EU lawmakers from among candidates nominated by the parliament's various political groups.
The assembly says the award is "the highest tribute paid by the European Union to human rights work".
Imprisoned Tanzanian opposition leader Tundu Lissu and Taraneh and Romina Rahimi - twins being held in prison for taking part in demonstrations against the Iranian government - were the others to make the EU shortlist.
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