An Egyptian court on Saturday referred to experts the case of Nile islanders seeking to avoid eviction by the government, a defence lawyer said.
The ruling by the administrative court comes nearly two years after Egyptian authorities moved to demolish "illegal" buildings on Warraq island, across from central Cairo.
The operation triggered violent clashes between residents and security forces, with at least one person being killed before the campaign was suspended.
The government maintains its actions were aimed at removing "encroachments" on state property, in order to develop the impoverished island.
Authorities claim illegal buildings have created an informal residential area which should be cleared, although officials deny the plans are intended to make way for a luxury investment project.
Many of Warraq's residents insist they hold legal property contracts and took the case to court to challenge the government's decision.
Saturday's ruling is "a preliminary procedure that would allow experts to check the veracity of the residents' appeal claims," said defence lawyer Sayed Ibrahim.
The legal proceedings will take months and a verdict is not expected until after June, Ibrahim said.
The fate of the islanders has drawn the attention of the United Nations' expert on housing rights, Leilani Farha.
"The government has expressed an interest in initiating luxury developments throughout Cairo," she said in October after a visit to Egypt.
"There is concern that the island... will fall prey to this vision."
She has since criticised "new expropriations and home demolitions", triggering charges from the government of "unfounded allegations" over its housing policies.