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If the court lacks power over the defendant, the case should be dismissed with prejudice for lack of personal jurisdiction.
When a court dismisses an action, they can either do so with prejudice or without prejudice. Dismissal with prejudice means that the plaintiff cannot refile the same claim again in that court.
The use of the phrase without prejudice is commonly understood to mean that if there is no settlement, the party making the offer is free to assert all its rights, unaffected by anything stated or done in the negotiations.
If a case is dismissed without prejudice that means that the case is being dismissed now, but that it may be refiled in the future. (note: there may still be time limits set by law that prohibit this refiling after a certain amount of time has gone by so be sure to check that for your individual type of case).
A dismissal with prejudice means that the ruling is the final judgment in the case. The dismissal prohibits the prosecutor from refiling the charges. In a dismissal without prejudice, the prosecutor can refile the charges (or file new charges based on the same circumstances) at some future time.
A judge may dismiss a case without prejudice in order to allow for errors in the case presented to be addressed before it is brought back to court. A judge will dismiss a case with prejudice if he or she finds reason why the case should not move forward and should be permanently closed.