Corinna zu Sayn-Wittgenstein-Sayn, 58, is seeking civil personal injury damages from the 84-year-old monarch, who lives in the United Arab Emirates.
In March, a High Court judge rejected Juan Carlos’ claim that he had state immunity and that English courts had no jurisdiction to hear the case.
Judge Matthew Nicklin ruled that he was no longer a member of the royal household of his son, the current Spanish King Felipe VI, that would give him legal protection.
But two judges at the Court of Appeal have now allowed him to challenge the ruling about whether he had immunity before his abdication in 2014.
Court documents claim that the pair were in an “intimate romantic relationship” between 2004 and 2009, and that he showered her with gifts, even after they broke up.
The case was adjourned without a date for a full hearing being set.
Zu Sayn-Wittgenstein-Say alleges that Juan Carlos harassed her after she declined to rekindle the relationship, using threats, break-ins at her properties and surveillance.
Lawyers for the Danish businesswoman accuse him of trying to frustrate her claim.
Juan Carlos, who appeared in court documents under his full name Juan Carlos Alfonso Victor María De Borbón y Borboón, strenuously denies the allegations.