At the heart of the challenge is whether the powers to call witnesses and compel the production of documents can be exercised by a select committee or only by the Legislative Council as a whole.

Select committees have used these powers to investigate problems in the construction of public housing, the chaos when the airport opened in 1998 and the authorities' handling of the outbreak of severe acute respiratory syndrome in 2003.

Representing the applicants, Sir John Swaine SC, a former president of the Legislative Council, argued that the 'powers and functions' of Legco, articulated in Article 73 of the Basic Law, referred to the whole of Legco and that such powers could not be delegated to a committee.

However, Mr Justice Cheung said it would be curious to expect only Legco as a whole to receive and handle complaints - another of its constitutional responsibilities articulated in Article 73.

He also noted that the powers of select committees had been set out in a 1985 law and that had the drafters of the Basic Law intended to strip select committees of the power to call witnesses and require the production of documents, they would have made that clear.

Regarding the applicants' challenge to a select committee's constitutional power to summon witnesses and order the production of documents, Mr Justice Cheung said: 'The court can readily see counter-arguments, and even significant counter- arguments, pointing to a contrary conclusion.'

The court will hear arguments in the judicial review on August 17. The hearing will also consider whether the select committee has gone beyond its remit, even though the judge said that line of argument 'barely satisfied' the test of being reasonably arguable.

Mr Justice Cheung rejected the applicants' contention that the inquiry violated their rights to privacy, legal professional privilege and to have their grievances resolved in a court of law.

The select committee that summonsed New World chairman Henry Cheng Kar-shun and executive director Stewart Leung Chi-kin is investigating the circumstances of Leung Chin-man's appointment as New World China Land's executive director and deputy managing director and whether there was a conflict of interest between it and his role as a top government official involved in building, planning and land policies.

The committee had been expected to deliver its findings in September but will put its efforts to compel testimony by Mr Cheng and Stewart Leung on hold.

Its chairwoman, Li Fung-ying, said it had not decided what to do about the report in light of Mr Justice Cheung's decision to grant a judicial review.

It might draft a final report, given the uncertainty about when legal proceedings would end, she said.

City University political analyst James Sung Lap-kung said the judicial review 'will no doubt cause a big headache for Legco', but it would be beneficial to have an authoritative judgment from the court on the issue. 'This will be a good thing. It would have had to be done sooner or later.'

He said events had only reached this stage because of Mr Cheng's 'extraordinary reaction' to the inquiry.

New World Development, the parent company of New World China Land, had no comment.