A Court of Appeal decision could allow AgResearch to extend its transgenic animal research.
The decision follows a High Court ruling last year that halted the application by the Crown Research Institute.
The Court of Appeal ruling allows the Environmental Risk Management Authority (ERMA) to resume its assessment of whether AgResearch should be allowed to continue its experiments with cows that have been genetically modified to include human proteins in their milk. The ultimate aim is to produce pharmaceuticals to fight diseases in humans.
AgResearch also wants to broaden these investigations to include other animals, such as buffalos, possums, guinea pigs and sheep.
In 2009, GE Free New Zealand said the four applications covering the research work were too generic to be allowed to proceed under law and challenged them in the High Court.
High Court judge Denis Clifford found ERMA had erred in law by agreeing to receive the applications in the first place and ordered that they be thrown out.
AgResearch appealed against the decision, saying it believed ERMA was acting within its legal rights.
The Court of Appeal has agreed with AgResearch, saying it believed ERMA still had room to dismiss the applications further down the track if it wanted to.
AgResearch general manager of science and technology, Jimmy Suttie, believes the scientific research is important to New Zealand and is pleased with the latest ruling.
But GE Free NZ president Claire Bleakley says she is angry at the Court of Appeal decision, which she believes confuses the legal situation rather than clarifying it.
Ms Bleakley says the group is seeking advice on whether to lodge an appeal with the Supreme Court.