"The law contains no formal obligation for landlords of cafes, restaurants and hotels without staff to implement a smoking ban," the appeal court at Leeuwarden in the northern Netherlands said in a statement.
It overturned the verdict handed down in a lower court against the pair from Groningen who became the first to be prosecuted following the introduction of the nationwide ban a year ago.
In May the appeals court of Den Bosch, in the southern Netherlands, upheld the acquittal of the two owners of the Victoria cafe in Breda, near the Belgian border.
"The court finds that the (ban) is partly non-binding, as it lacks legal grounding" regarding establishments with no staff, said a court statement.
The ban on smoking in the hotel, restaurant and catering industry had sought to protect staff from the dangers of second-hand smoke inhalation.
Several thousand small bars and cafes in the Netherlands united late last year to defy the smoking ban and create a joint legal defence fund, arguing they lacked the floor space and money to erect separate smoking-only areas.
A recent Dutch health ministry study found that 62 percent of Dutch cafes saw a drop in business in October and November 2008, compared with a year earlier, on account of the smoking ban.