The decision by the urgent matters court may be used by the government as a green light to go ahead with the transfer of the islands of Tiran and Sanafir to Saudi Arabia.
In June, an administrative court had overturned a maritime border agreement, signed during a visit to Cairo by Saudi Arabia’s King Salman in April, that handed the two islands to Riyadh.
The deal prompted accusations that President Abdel Fattah al-Sisi had “sold” the islands in return for Saudi investments, and led to rare protests in Cairo.
The government said in June it would appeal the administrative court’s decision.
It has said the islands were Saudi to begin with but leased to Egypt for protection in the 1950s.
In Thursday’s decision, the urgent matters court issued an injunction against the freeze, at the behest of a lawyer.
The court does not rule on the substance of a case, and its decisions can be appealed.
Khaled Ali, the lawyer who had initially demanded the transfer be blocked, said on Thursday that the urgent matters court had no jurisdiction in this case.
“Only the highest administrative court can suspend the implementation of an administrative court’s verdict,” Ali told AFP.
Mohamed Nour Farahat, a law professor at Zagazig university, shared Ali’s opinion.
But he said the government may try to use the ruling to put the transfer deal to a vote in parliament, predicting “a confrontation between powers.”
Oil-rich Saudi Arabia is one of the main regional backers of Sisi, a former army chief who has overseen a crackdown on the opposition since ousting his Islamist predecessor Mohamed Morsi in 2013.