The risk to public health "was objectively increased" after the new EU rules were introduced in July, the European Court of First Instance ruled.
The court suspended the European rules whereby sheep and goat meat could be tested and put on the market if found disease-free during an outbreak of a transmissible spongiform encephalopathy (TSE) such as mad cow disease or scrapie.
It is possible that even after animals are tested and declared disease-free they could be infected with "non-detected TSEs" the court ruled.
BSE is the suspected cause of a similar brain-destroying illness in humans called variant Creutzfeldt-Jakob disease (vCJD).
The judge said that since the EU rule had been in place since July "it is possible that meat or other animal products infected with a TSE, including BSE, could have been put on the market for human consumption."