Under the 1972 policy, a male villager can apply for permission to build once in his lifetime a three-story small house within his village, colloquially called "ding rights".

Three options are available for one to exercise ding rights - through a private treaty grant, whereby the government offers land at a premium two-thirds of the market price to a villager to build a house; free licenses that allow one to build houses on private lots without paying a land premium; and an exchange whereby one can switch plots with the government to build houses.

"King of judicial reviews" Kwok Cheuk-kin and social worker Hendrick Lui Chi-hang filed a judicial challenge against ding rights in 2015 as they felt the policy discriminates against non-indigenous and female indigenous villagers.

He gained a partial victory in April 2019 when high court judge Anderson Chow Ka-ming ruled that only the second option for the villagers to build houses on private land was lawful.

The Court of Appeal, however, overturned that ruling earlier this year, a move the Court of Final Appeal has now ruled was correct.

A five-judge panel led by Chief Justice Andrew Cheung Kui-nung declared that the so-called ding rights fall within the traditional rights and interests of indigenous New Territories villagers as listed under Article 40 of the Basic Law.

"The Court of Appeal was correct to find that the word 'traditional' in Article 40 of the Basic Law is to be determined by reference to the state of affairs in April 1990 and does not require that a protected right or interest be traceable to the period before 1898," the judges wrote.

"In line with the principle of continuity, the fact that only male descendants of pre-1898 villagers were eligible under the policy was part of the description of the system which the HKSAR inherited and which Article 40 intends to protect."

The judges also dismissed the applicant's argument that the policy is discriminatory.

"'Lawful' in Article 40 of the Basic Law is not intended to refer to the absence of discrimination forbidden by Article 25 and 39 of the Basic Law and Article 22 of the Bill of Rights, whose application in the special context of indigenous rights is excluded by Basic Law Article 40."

The top court, however, disagreed with the Court of Appeal which had pointed to a "glaring delay" in this legal challenge.

The Court of Final Appeal judges said the rule that judicial reviews must be brought promptly has never been absolute.