The Paris appeal court has upheld a ruling that Facebook can be sued under French - not Californian - law, reports BBC News.
A French teacher won in the Paris high court last year, arguing that Facebook should not have suspended his account because of an erotic image on his page.
Facebook appealed against that ruling - but the appeal court has now upheld the criticism of Facebook's user terms.
US-based Facebook says users can only sue in California. It removed a close-up of a nude woman, painted by Courbet.
The teacher, Frederic Durand-Baissas, argued that he had a right to post a link on Facebook with the image of the famous Gustave Courbet painting. The original 19th-Century work hangs in the Musée d'Orsay in Paris.
The teacher accused Facebook of censorship and said the social network should reinstate his account and pay him 20,000 euros (£15,521; $22,567) in damages. He sued the company in 2011.
It is seen as a test case, potentially paving the way for other lawsuits against Facebook outside US jurisdiction.
Facebook users have to agree to the tech giant's terms of service, which state that its jurisdiction is California. About 22 million French people are on Facebook.
The Paris high court decided that the company's argument was "abusive" and violated French consumer law, by making it difficult for people in France to sue.