A decision by former Northern Ireland Secretary Peter Hain to appoint two Orangemen to the body which rules on disputed marches has been held unlawful.
The House of Lords overturned a majority Court of Appeal judgment that the appointment of Portadown Orangemen David Burrows and Don Mackay to the Parades Commission was valid.
The dispute had been taken to the Lords by Catholic residents, who complained that no representation had been sought from residents' groups.
Mr Mackay has since quit the commission after it emerged that he listed Democratic Unionist MP David Simpson and SDLP MLA Dolores Kelly as referees without seeking their permission.
The residents, who initially won their case in the High Court, complained that Mr Hain had written to the main political parties, the four main churches and the loyal marching orders during the appointments process, but had not sought applications from any residents' group.
The Parades Commission was established in 1998 following the North Report which investigated the civil strife surrounding contentious Orange marches in Portadown, Ormeau Road in Belfast and other parts of the country in the mid-1990s.
The commission consists of a maximum of seven members.
Its job is to decide what restrictions and conditions, if any, should be imposed on contentious parades.
Around 3,000 marches are notified to the commission each year, 75% of them are organised by loyalist bodies. Most are non-contentious.
Lord Bingham said today that there was an obvious political need to secure the co-operation of loyalist bodies which had strongly opposed the establishment of the commission.
Mr Burrows and Mr Mackay had both been very prominent proponents of the loyalist parade from Drumcree church along the Garvaghy Road to Portadown.
When appointed to the commission, neither had resigned from the bodies to which they belonged or given any indication of a change of allegiance.
