Taiwan’s constitutional court has ruled that a cabinet decision to scrap construction of the Lungmen ABWR power plant was flawed.

The Council of Grand Justices, which was seeking to avoid a constitutional crisis stopped short of saying the decision was unconstitutional. Premier Chang Chun-hsiung would have been forced to resign if the judges had ruled the decision unconstitutional.

Approval for the the country’s fourth plant was granted by the previous Nationalist Party administration, which argued that the 2,700MW unit was vital for economic growth and to avoid power shortages. Seven months after winning the elections last March president Chen Shui-bian and his anti-nuclear Democratic Progressive Party cancelled the project.

Yang Jen-shou, the secretary general of the Judicial Yuan, Taiwan’s top judicial body, said: “If the policy change wins the support of a majority of the Legislative Yuan, it can be implemented.” Yang said that if a majority of the legislature opposes the halting of construction of the plant, the cabinet must agree to resume construction or resolve the issue through consultations between the ruling and opposition parties.

The Legislative Yuan is expected to make a decision on the future of the plant in a special session due to take place within the next few weeks.

The legislature could topple the premier in a vote of no confidence, but it risked dissolution by the president who can call snap elections.

The ruling cheered the island’s financial markets with the stock index closing 5.27% higher and the Taiwan dollar strengthened on hopes that the $5.5 billion nuclear project will be resumed.