Qinglin Wang, a former director of the neurology department at the Tianjin Medical University, moved to Australia in 2001 but struggled to secure a one-year internship required before he could practice in Australia.

According to documents tendered in the ACT Civil and Administrative Tribunal, Mr Wang had "satisfied all the requirements for registration as a health practitioner in Australia" apart from the internship.

When his application for an internship at Canberra Hospital was rejected in 2013, he contacted the Human Rights Commission and launched legal proceedings claiming he was "treated unfavourably due to his age and race".

In a judgement published on Friday, ACAT senior member Allan Anforth said the ACT government had "both directly and indirectly discriminated against him by reason of his race" by automatically downgrading his application status.

In 2013, applicants for the Canberra Hospital internship were ranked according to the location of their university and the quality of the institution, with ANU students given first preference and international graduates automatically ranked last.

"The situation facing the applicant is one in which, no matter how excellent his qualities and qualifications, [he] cannot be selected for an internship until the least meritorious domestic graduate has been offered the position," Mr Anforth said.

"The applicant is condemned to suffer this fate for no other reason than that he was born and educated in his home country of China."

But lawyers representing the ACT government rejected Mr Wang's claim and drew a distinction between the nationality of an applicant and the location of the university they graduated from.

Chief medical administrator for ACT Health Professor Francis Bowden told the court the priority system recognised Australian graduates were specifically trained to practice in the national health system.

According to the judgment, Professor Bowden said the selection criteria represented "the best return on investment [for] the commonwealth and territory governments which fund medical students' education and internships".

While Mr Anforth said there may be valid reasons for the state of the selection policy, these were irrelevant to whether discrimination had occurred or not.

"It is not open to a minister acting in an executive capacity, or to any public administrator to sidestep that law because they perceive parochial economic advantages in doing so," he said.

Mr Anforth said there was no doubt the ranking system and rejection harmed Mr Wang financially and caused him to suffer physically and mentally from stress.

"The condition imposed by the respondent that internship applicants graduate from an Australian university (and preferable the ANU) operates in practice to deprive persons such as the applicant of foreign origin (and thus education) of the opportunity for employment and training as interns," he said.

Internships at Canberra Hospital are notoriously competitive with the ACT government receiving 463 applications for just 96 positions when Mr Wang submitted his application.

ANU medical school graduates were awarded 78 internships with the remaining 18 positions offered to other domestic graduates.

The ACAT now awaits further submissions from both parties as to the reasonableness of the judgment or for a decision to appeal against the interim decision.