It follows a request by Austrian citizen Max Schrems to the Irish Data Protection Commissioner (DPC) to investigate if there was adequate protection of his data transferred to the US by Facebook, which has its European headquarters in Dublin.
"The judgement has clarified that it is now for the data protection commissioner to revisit Mr Schrems' complaint and carry out the necessary investigations," Irish Data Protection Minister Dara Murphy said.
It is likely the commissioner will then launch a full investigation into Schrems' complaints.
Schrems went to the High Court in Ireland after the commissioner refused to investigate his concerns on the grounds the 'Safe Harbour' system, which allowed tech giants to send personal data to the US, was overseen by the European Commission.
The case judge subsequently referred the case to the European Court of Justice.
Commissioner Dixon also said "the issues dealt with in the judgment are complex.
"In declaring the old 'Safe Harbour' rules invalid, however, the significance of the judgment extends far beyond the case presently pending in Ireland," said Dixon.
Murphy said there was now an opportunity "to set robust global standards for the protection of personal data."
He added: "The legitimate and safe use of personal data, and indeed the need for data transfer must always be balanced with strong standards for the protection for personal data.
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