The Supreme Court of Canada has sent a case involving a newspaper reporter who refused to reveal confidential sources in a federal sponsorship scandal back to a lower court.
In the 9-0 ruling, the court ruled that Daniel Leblanc could shield his sources if it was in the public's interest.
The Globe and Mail reporter's case has now been sent back to a Quebec court.
The scandal stems from advertising firms being paid with government money in the 1990s in exchange for no work.
The Quebec Superior Court court permitted lawyers from La Groupe Polygone, one of the advertising firms named in the scandal, to question Mr Leblanc in court about the identity of his source used in the stories he broke about the government sponsorship programme.
But Mr Leblanc said he would rather go to jail than reveal his source.
Weighing public interest
In the ruling, the Supreme Court also gave the Quebec court a set of guidelines with which to decide the case.
The lower court must "balance the importance of disclosure to the administration of justice against the public interest in maintaining journalistic source confidentiality", the ruling said.
After coming out of the courtroom, Mr Leblanc told reporters he was confident he would be able to prove the newspaper stories were in the public's interest.
La Groupe Polygone is being sued by the city of Ottawa which hopes to retrieve some of the $35m (£21m) that company allegedly over-charged the government in the 1990s.
In 2004, Canada's auditor-general issued a report which said that in the late 1990s, the governing Liberals systematically channelled at least $100m from a $250m government programme to advertising and communication agencies with ties to the Liberal Party, for little or no work.
The scandal assisted in driving the Liberal Party in Quebec out of power.