The ruling made by the European Court of Justice raises the stakes in a European Union trade dispute with Canada even as the two sides pursue wide-ranging free trade talks.
The court decision came in response to a request by the Canadian Inuit group for an injunction against the EU ban, which arose over concerns of brutality in the seal hunt.
"The operation of the conditions restricting the placing on the market of seal products ... is suspended," said the ruling, signed in Luxembourg.
It was not immediately clear how long the ban might be put on hold. Canada's Inuit leader Mary Simon said she hoped the decision would push the EU into scrapping its plans.
"I would hope that the European Parliament would see fit at this stage to do the right thing and withdraw its legislation," said Mary Simon, president of the group representing Canada's Inuit people.
Even though the ban exempts products from the traditional Inuit seal hunt, Inuit groups in Canada's vast Arctic region say the measure cuts prices and hurts their economy.
Canada's main seal hunt takes place in March and April on ice floes off the Atlantic Coast and in the Gulf of St. Lawrence. The seals are usually shot or bludgeoned over the head with a spiked club called a hakapik.
Seal products include fur for clothing and oil that is used in vitamin supplements.
The spat comes as Ottawa is pushing for closer economic ties with the EU, promising to finalize a free trade pact by next year that it says could rake in an extra 8 billion euros ($7.4 billion) for Canada within seven years. The next round of talks is in October.
In a related development, officials said on Thursday that Ottawa has asked the World Trade Organization to establish a dispute settlement panel in hopes of overturning the seal ban.
Canada argues that the EU action is misinformed and violates European WTO trade commitments. Ottawa says it is defending Atlantic communities that rely on the seal trade for survival.
The EU promised to defend its decision, which it said does not discriminate against Canada as it prohibits seal from other countries as well. (Reuters)
