According to judicial sources and activists on Monday, judges gave the military 90 days to interview six witnesses to the shooting after a petition was presented by activist Brian Avery.
Avery suffered severe facial disfigurement after being shot in the face by Israeli forces operating in the town of Jenin in the West Bank.
Working with the International Solidarity Movement (ISM) when he was shot, Avery petitioned the court to order a criminal investigation into the shooting which occurred during clashes between Palestinian stonethrowers and Israeli occupation troops on 5 April 2003.
After a brief internal inquiry, the army concluded it had no knowledge of the shooting and decided not to open an official investigation.
The ISM said six foreign activists had witnessed the shooting, but none of them had been called to give testimony at the initial inquiry.
"The judges told the military attorney general to take oral testimony from all the eyewitnesses then decide whether to stick by the army's original decision not to pursue an inquiry into the shooting," ISM founder and legal coordinator Neta Golan said.
"The court gave them 90 days to interview all six witnesses. If they decide not to pursue an inquiry, they will have to explain why."
ISM is a group of activists who engage in non-violent action to protect civilians from Israeli aggression in the occupied West Bank and Gaza Strip.
US activist Rachel Corrie was crushed to death by an Israeli bulldozer in southern Gaza in March 2003 and a month later British activist Tom Hurndall was declared clinically dead after being shot in head in the same area.