The Appeal Court has ruled NHS patients were not properly consulted over a plan to allow a private US health firm to run local GP services.
The local primary care trust chose United Health Europe
United Health Europe won the contract to provide care in north Derbyshire.
The judgement overturns a High Court decision which said there was a lack of public consultation, but UHE would probably have won anyway.
The judges said "probability" was not enough. The decision means a full consultation will now take place.
Lord Justice May said: "Probability is not enough.
"The simple fact is that the Primary Care Trust had a duty to consult and they did not properly perform it."
He said that if consultation had taken place the PCT "might well have been negotiating with another bidder".
The second appeal judge, Lord Justice Keene, said: "The sooner the arrangements for GP services in this part of Derbyshire are sorted out lawfully and finally, the better for everyone."
United Health Europe was chosen as the preferred bidder in January by local health chiefs to run two practices.
But the deal has not been finalised as a local resident launched a High Court bid against the move, arguing the consultation was not run properly.
Last year, the government said it wanted to see a range of providers running community NHS services.
To date, much of the involvement has been in the hospital market, although there are a small handful of NHS GP services run by private organisations.
United Health Europe was chosen by North Eastern Derbyshire Primary Care Trust to run the Creswell health centre, which has two GP practices, from a short-list of six after 48 different providers expressed an interest.
The move was expected to herald the start of a new wave of private involvement in GP care.
The first GP surgery run by a commercial private company - as opposed to "traditional" GPs who are independent contractors who work for the NHS - opened in Barking and Dagenham in May this year.
Campaigners believe private firms could be put off from bidding for other NHS contracts if the court rules residents should be given more of a say over local services.
Pam Smith, the local resident and Labour parish councillor at the centre of the case, said several other local candidates were overlooked by the trust when it considered who should run the health services.
At the hearing, counsel for Ms Smith said the PCT had a legal duty to consult patients under section 11 of the Health and Social Care Act, but had made only very limited contact with the local community.
The PCT argued that as the fundamental nature of the service had not changed, there was no legal requirement for extensive consultation.
A spokesman for the PCT said during the case: "We feel with have acted in good faith and with integrity throughout."
A spokesperson for the Department of Health said: "Today's decision means that the PCT should go through its tender process again and consult on the criteria used. It has no wider implications for the NHS or for government plans to introduce new providers in primary care.
"The government remains committed to ensuring people are properly involved in planning changes to local NHS services. That's why we have just announced steps to simplify and strengthen current legislation on consultation."
Alex Nunns of Keep Our NHS Public said: "This is a complete and total victory. If patient choice is to mean anything at all, the NHS must listen to these concerns, and stop imposing the private sector on unwilling communities."