In a unanimous ruling, the U.S. Court of Military Commission Review struck down the March 2007 conviction of David Hicks, reversing what had been one of the American government's few successes in prosecuting prisoners at Guantanamo Bay.
Like Hicks, Khadr also waived his rights to appeal when he pleaded guilty before a widely maligned military commission in Guantanamo in October 2010 to five war crimes committed as a 15-year-old in Afghanistan.
However, his Pentagon-appointed lawyer filed an appeal in November 2013 with the Court of Military Commission Review, arguing the waiver was never valid and the military commission itself had no jurisdiction to try the case in the first place.
"(The) decision in the David Hicks case is important to Omar Khadr's appeal before the same court," Nate Whitling, one of Khadr's lawyers, said from Edmonton.
"Essentially, it confirms that the form of waiver signed by Omar as part of his plea deal is invalid, and that he may appeal all five of his convictions."
Legal experts say what Khadr was convicted of doing was not a war crime under either American or international law — arguments similar to those made by two associates of terrorist mastermind Osama bin Laden. In their cases, a U.S. civilian court quashed their military convictions.
Despite those rulings, the commission review court has refused to hear the case, arguing other appeals to civil courts have to be decided first.
While Hicks waited six years before initiating his appeal, the review court heard his challenge and overturned his conviction despite the waiver and the delay.
Khadr, who maintains he only pleaded guilty to get out of Guantanamo Bay, appealed after three years.
Because a hearing could still take years, Khadr's lawyers have filed a bail application in Canada — to be heard next month. He is currently serving out the remainder of his eight-year sentence at a prison in Innisfail, Alta.
Hicks, 39, pleaded guilty to providing material support to terrorism. It was a plea bargain in which all but nine months of his seven-year sentence was suspended and he was allowed to return to Australia by the end of that year.
In 2014, an appellate court ruled that material support was not a legally viable war crime for a military commission. Prosecutors argued his conviction should still stand because he agreed not to appeal as part of the plea deal, an argument rejected by the U.S. Court of Military Commission Review.
The U.S. government has not said whether it will attempt an appeal and a Pentagon spokesman had no immediate comment.
For Hicks, the decision is the end of an odyssey that began when he travelled to Pakistan in 2000 and then to Afghanistan, where he attended a training camp run by al-Qaida.
He was captured and turned over to U.S. forces and spent about five years at Guantanamo.
-With files from Associated Press