An adviser to the EU's top court says a ruling against the British owners of a holiday home in Turkish-controlled northern Cyprus should be recognised.
The Court of Appeal of England and Wales had requested a legal opinion from the European Court of Justice.
Linda and David Orams are engaged in a long-running legal battle with Meletios Apostolides, a Greek Cypriot who claims the land their home stands on.
Breakaway Turkish-held northern Cyprus is not internationally recognised.
The Orams, a retired couple from Hove in Sussex, got a favourable ruling in 2006 from the UK High Court, which said they could keep their villa in northern Cyprus.
But Mr Apostolides appealed, insisting that the land was rightfully his because his family had been uprooted from it by the Turkish invasion in 1974.
The UK High Court ruling came after the Nicosia District Court, in the Republic of Cyprus, had ruled that the Orams should demolish their house, return the land and pay "rent" for the time they lived there.
The Advocate General, Juliane Kokott, has now advised the European Court of Justice that the Nicosia court "has jurisdiction in relation to the property dispute, irrespective of the fact that the Republic of Cyprus does not exercise effective control over Northern Cyprus".
Her opinion is not binding on the European court's judges, but in most cases they follow her recommendations.
Ms Kokott was asked to interpret the EU's Brussels Regulation in this case - a regulation dealing with the recognition and enforcement of judgments issued by courts in other EU member states.
Test case
The Republic of Cyprus joined the EU in 2004, even though it does not control the northern part of the island.
Property disputes are one of the main obstacles to efforts to reunify Cyprus.
EU law was suspended in northern Cyprus for the purposes of Cyprus's accession, but the advocate general argues that the Orams' civil case still falls within the scope of the EU regulation.
"The fact that the [Nicosia court's] judgment cannot actually be enforced at this time does not, in the Advocate General's opinion, relieve courts in other member states from the obligation to recognise and enforce the judgment," a statement from the European Court of Justice said.
It is seen as a test case because estate agents in northern Cyprus have sold many holiday homes to British citizens. The European court's rulings are binding on EU member states.
The judges in Luxembourg have started considering the Orams' case and they may take three to six months to reach a verdict, a court spokesman told the BBC.
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