The Administrative Court of Appeal (Kammarrätten) ruled on Friday that Sweden's School Inspectorate (Skolinspektionen) was out of line when it closed the elite Lundsberg boarding school in late August this year.
The inspectorate does not have the supervisory responsibility for the boarding school, the court argued.
The inspectorate acted quickly, closing the school within a week of the news hitting the papers across the country. Two weeks later, however, the decision to close the school was overturned by the administrative court (förvaltningsrätten), which stated that the inspectorate's jurisdiction revolved around what students learned at school, not what they did in their free time.
On Friday, the court of appeal affirmed the administrative court's decision.
The school, which is the alma mater of Sweden's Prince Carl Philip and many other members of Swedish high-society, has been hit with a series of reports of students being assaulted in hazing rituals.
In May last year, students at the school spoke out after being forced into oral sex and eating manure. Speaking with Svergies Television (SVT), a former vice principal described the situation at Lundsberg as something out of Lord of the Flies.
In 2011, a student had their nipples burned with an electric fly swatter.
Founded in 1896, Lundsberg was inspired by British boarding school tradition and currently has an enrolment of around 170 students, around 60 percent of which are boys.
In October of last year, the agency told the school that it will impose a 500,000 kronor ($75,000) fine if it didn't act to stamp out the practice of bullying and violence among pupils.