Lithuania's Supreme Court has ordered the retrial of Michael Campbell, who was acquitted of plotting to smuggle arms from the Baltic state to the Real IRA.
Campbell was initially sentenced to 12 years in prison in 2011 for aiding a terrorist group and illegal possession of arms.
But an appeals court struck down the sentence in October last year, saying it could not rule out Campbell's claim that he was framed by British intelligence.
In the latest twist in the long-running case, a seven-judge panel that the appeals court gave a "contradictory" assessment of intelligence witnesses.
"The panel decided to annul the verdict of 2 October, 2013, and refer the case to an appeals court," judge Gintaras Goda said, reading the verdict.
Campbell, 41, lives in Ireland and did not travel to Vilnius for the verdict.
His lawyers and prosecutor did not appear either, and they could not be immediately reached for a comment.
"The court of appeals groundlessly downgraded part of evidence and by giving priority to testimony of the acquitted person," prosecutor Gedgaudas Norkunas told the court in a hearing last month.
Campbell's lawyer Ingrida Botyriene rejected the prosecutor's arguments, telling the court that "provoked activity cannot be recognised as criminal".
Campbell went on trial in August 2009 after having been arrested in a January 2008 sting in Vilnius, where he met a Lithuanian agent posing as an arms dealer.
He denied being a member of the Real IRA.
Campbell's brother Liam was one of four Real IRA leaders found liable by a civil court for a 1998 bombing in Omagh, Northern Ireland that killed 29 people.