The Tokyo High Court gave the go-ahead Tuesday for Sumitomo Trust & Banking Co. to appeal its ruling allowing merger talks between UFJ Holdings Inc. and Mitsubishi Tokyo Financial Group Inc.

As a result of the approval, the Supreme Court will have to make a judgment on Sumitomo Trust’s claim that UFJ cannot start trust merger negotiations with a third party because it had agreed to sell its trust unit, UFJ Trust Bank, to Sumitomo Trust.

The Code of Civil Procedure regulates that a high court must approve an appeal against one of its ruling to the top court if the judgment runs counter to Supreme Court precedents or if it entails key matters concerning the interpretation of the law.

Sumitomo Trust made an appeal requiring the high court’s approval after the court last Wednesday rescinded a lower court order that had effectively frozen merger talks between UFJ and Mitsubishi Tokyo.

The bank also made another appeal to the Supreme Court the same day, a special interlocutory appeal that questions the constitutionality of the high court ruling.

Sumitomo Trust said in a statement that it “expects the Supreme Court to make just and appropriate judgments in a swift manner” on deliberations of both appeals.

UFJ said it agreed with the high court’s earlier decision to repeal the lower court ruling.

“We are convinced that the Supreme Court will make a proper judgment,” it said.

UFJ, encumbered by massive losses stemming from bad-loan disposals, agreed in May to sell UFJ Trust Bank to Sumitomo Trust for 300 billion yen.

UFJ later reversed course, seeking a merger with Mitsubishi Tokyo while reneging on the UFJ Trust deal as it realized its rehabilitation would be unsatisfactory with a business alliance only in the trust division.

UFJ and Mitsubishi Tokyo announced the signing of a memorandum of understanding July 16. Sumitomo Trust filed for the court injunction the same day, claiming the unilateral cancellation of the trust unit sale was a breach of contract.

On July 27, the Tokyo District Court issued a preliminary order to discontinue trust merger discussions between UFJ and Mitsubishi Tokyo. It also turned down UFJ’s appeal against the order on Aug. 4.

But Wednesday, the Tokyo High Court overturned the lower court ruling, allowing UFJ and Mitsubishi Tokyo to resume merger talks. Sumitomo Trust immediately appealed that decision to the Supreme Court.

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