The world-famous university had applied to the High Court in London to dismiss the claim by Faiz Siddiqui but in an 18-page judgement by Justice Kerr last week the court ruled that Oxford does have a case to answer, 'The Sunday Times' reported.
Siddiqui, who studied modern history at Brasenose College at the university, accuses its staff of "negligent" teaching of his specialist subject course on Indian imperial history, which led to him getting a 2:1 back in 2000.
The 38-year-old's barrister Roger Mallalieu had told the court that the problem came down to four of the seven staff teaching Asian history being on sabbatical leave at the same time during the 1999-2000 academic year.
Siddiquibelieves he could have had a high-flying career as an international commercial lawyer if he had not got lower grades and decided to take the legal route, which came to light last month.
His legal team had singled out the "boring" standard of tuition thatSiddiquihad received from David Washbrook, an expert on the history of southern India between the 18th and 20th centuries.
Mallalieu claimed that the eminent historian's teaching had suffered from the "intolerable" pressure of the staff shortages on the course.
"There is no personal criticism of Dr Washbrook. Our target is on the university's back for allowing this to happen," Mallalieu told the court.
Siddiqui, who trained as a solicitor after college, suffers from depression and insomnia, which he links to his "disappointing examination results".
Oxford University had argued that the claim was baseless and should be struck out because of the over 16 years that had passed sinceSiddiquigraduated.
Professor Alan Smithers, an education expert at Buckingham University, told the newspaper: "This is a test case and in future universities will have to ensure that what they do stands up to critical inspection in the courts. In the past, universities have been quite cavalier about the quality of their teaching.
"If Mr Siddiqui wins, this will open the door to a flood of other students who do not think they got the degree they deserved because of issues about the teaching they received."
Oxford University has declined to comment on the latest judgement so far.
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