Should the Libyan authorities wish to conduct national prosecutions against the suspect, they shall submit a challenge to the admissibility of the case before Pre-Trial Chamber I, pursuant to articles 17 and 19 of the Rome Statute of the ICC. Any decision on the admissibility of a case is under the sole competence of the Judges of the ICC.
Therefore, contrary to what has been reported in the media, Pre-Trial Chamber I of the ICC remains seized of the case and the Libyan obligation to fully cooperate with the Court remains in force.
(Our colleague, Leiden Professor Carsten Stahns, details the relation between the ICC Statute and the Libya situation here.) Click on this title for the full ICC press release, "Course of action before the ICC following the arrest of the suspect Saif Al Islam Gaddafi in Libya."