The U.S. Court of Appeals for the D.C. Circuit split 2-1 on the question. In doing so it upheld a key provision of the Military Commissions Act, setting up a Defense Department system to prosecute terrorism suspects. Instead of facing a courtroom, detainees will now be judged by a three-officer military panel.
Despite Democrats promising legislation to give the detainees legal rights attorneys have promised to appeal against the ruling to the Supreme Court.
The White House is seeing it as a significant blow in favour of its legislation. White House deputy press secretary Dana Perino called the decision "a significant win".