The legal challenge regarding July 2026’s parade was launched last month.
The High Court was told on Tuesday that the commission conceded the case last week and requested the court quash its determination before a full hearing.
The commission conceded a procedural error in how it dealt with the annual application for permission to walk along the Garvaghy Road.
Not all six members of the public authority had signed off on the final determination before it was issued last month.
“I have no hesitation in making the quashing order,” Mr Justice McAlinden said.
“This is simply a case that does not stand up to any scrutiny at all.”
Lawyers representing the local Orangeman claimed the commission’s latest decision unlawfully breached his rights to freedom of belief, expression and peaceful assembly under the European Convention on Human Rights.
Lawyers for the applicant also argued that Garvaghy Road residents had refused talks with the Orange Order and the commission breached legislation by making it “a pre-requisite to a parade”.
It was also claimed the commission had imposed restrictions to prevent disorder when no evidence for potential trouble was presented.
Part of the challenge related to a WhatsApp chat group where commissioners were allegedly urged to reflect on any opinions about Drumcree expressed by an online commentator who used the pseudonym ‘Choyaa’.
The commission also failed to act on a request to make representations from Carla Lockhart, the Democratic Unionist Party (DUP) MP for the area.
Commission members were also accused of failing to read or consider the decision.
Lockhart was in court, along with several other politicians, including the Traditional Unionist Voice (TUV) MP Jim Allister.
Counsel for the Orangeman who took the case, John Larkin KC, was critical of the commission’s approach to proceedings.
Seeking an order for heavier indemnity costs to be made against the authority, the barrister accused some of its representatives of a “scandalous abdication of responsibilities”.