BT and TalkTalk have been granted a judicial review of the Digital Economy Act after judges upheld their complaints that the act lacked clarity and failed to adhere to European law.
The decision will be seen as a huge victory for internet service providers (ISPs) and numerous other bodies that campaigned hard for the Act to be stopped and debated more thoroughly as Labour rushed it through.
The judges granted the decision based on concerns with three of the four issues the companies raised concerning compliance with the technical standards directive, compatibility with privacy directives and compatibility with e-commerce directives.
Andrew Heaney, executive director at TalkTalk, said the company was "very pleased" that the court had recognised the concerns raised, and hoped it would lead to a more considered debate on the Act.
"The provisions to try to reduce illegal file sharing are unfair, won't work and will potentially result in millions of innocent customers who have broken no law suffering and having their privacy invaded," he said.
"We look forward to the hearing to properly assess whether the Act is legal and justifiable and to ensure that all parties have certainty on the law before proceeding."
V3.co.uk contacted BT for comment on the decision but had yet to receive a reply at the time of publication.
More details are expected from court at 15.30 GMT on Wednesday.
The Digital Economy Act was fiercely debated in the run up to the general election with numerous rights groups and technology companies arguing that it was not being given the necessary time or level of debate required to properly address key issues.
Robin Fry, a partner at law firm Beachcroft LLP said it was "not surprising" that Digital Economy Act was under challenge, but added that any redrafts of the law could take many years.
"It's littered with uncertainties around who is legally bound to enforce the anti-infringement measures and whether it conforms to EU law. It creates a stunningly complex edifice that ISPs, public libraries and consumers want to bring down," he said.
"If, as is likely, it is found to be invalid, it may take years, if ever, for a new version to be brought to the statute book."
Jim Killock, director of the Open Rights Group, an active campaigner against the Act, welcomed the news, and hoped that the decision would lead to a better legal system around issues of copyright.
"The Act is a mess and badly needs repealing. Judicial Review may give the government the chance to drop this heavy-handed approach to copyright enforcement," he said.
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