For Women Scotland Ltd instructed lawyers to go to the Inner House of the Court of Session following a decision made last year by judge Lady Wise.
The campaigners failed to convince Lady Wise to rule that the Gender Representation on Public Boards (Scotland) Act 2018 was unlawful.
The organisation believed that plans to amend the legislation which would allow for transgender people to have greater representation on public boards - cannot be sustained in law.
The group believed the legislation breaches existing equality legislation passed by the UK Parliament.
For Women also argued the Scottish Government couldn’t legislate on equalities law as it was reserved to the UK Parliament.
Lady Wise rejected the submissions, concluding the Scottish Ministers were entitled to proceed with its plans, prompting the appeal to the Inner House of the Court of Session.
Advocate Aidan O’Neill QC, for For Women, told judges Lady Dorrian, Lord Pentland and Lord Malcolm, that their colleague had misinterpreted the law.
He argued that the Equality Act 2010 contains “protected characteristics”.
He said that one of these characteristics protects people against sex discrimination.
Mr O’Neill said the Equality Act defines sex as being either male or female, or a group of people like men or boys, or women or girls.
Mr O’Neill also said that the case law on sex discrimination defined women on the basis of unique biological features - such as fertility.
He said that another protected characteristic under the act is for transgender people who face discrimination.
Mr O’Neill said the Scottish Government’s proposals to help transgender people gain greater representation on public boards undermined the rights that women had under the Equality Act.
In a written judgment issued by the court on Friday, Lady Dorrian and her colleagues upheld Mr O’Neill’s submissions.
Lady Dorrian, who delivered the decision, wrote that the Scottish legislation breaches the Equality Act 2010. She said the 2018 act was “out with” the legislative competence of the Holyrood Parliament.
She wrote: “By incorporating those transsexuals living as women into the definition of woman the 2018 Act conflates and confuses two separate and distinct protected characteristics, and in one case qualifies the nature of the characteristic which is to be given protection.
“It would have been open to the Scottish Parliament to include an equal opportunities objective on public boards aimed at encouraging representation of women. It would have been open to them separately to do so for any other protected characteristic, including that of gender reassignment.
“That is not what they have done. They have chosen to make a representation objective in relation to women but expanded the definition of women to include only some of those possessing another protected characteristic.
“In any event, the definition of woman adopted in the legislation includes those with the protected sex characteristic of women, but only some of those with the protected characteristic of gender reassignment.
“It qualifies the latter characteristic by protecting only those with that characteristic who are also living as women.
“The Lord Ordinary (Lady Wise) stated that the 2018 Act did not redefine ‘woman’ for any other purpose than ‘to include transgender women as another category’ of people who would benefit from the positive measure.
"Therein lies the rub: ‘transgender women’ is not a category for these purposes; it is not a protected characteristic and for the reasons given, the definition of “woman” adopted in the Act impinges on the nature of protected characteristics which is a reserved matter.
“Changing the definitions of protected characteristic, even for the purpose of achieving the gender recognition objective is not permitted and in this respect the 2018 Act is out with legislative competence.
“For the above reasons the reclaiming motion succeeds.”
The decision comes just 24 hours after Outer House judge Lord Sandison ruled government plans to allow people to ’self identify’ when answering a question about their sex in this year’s census was lawful.
Lawyers for the Scottish Government denied the Holyrood administration was acting unlawfully.
At proceedings last year, Scottish Government lawyer Ruth Crawford QC said the law allowed for the Scottish Government to legislate on the matter.
She said the proposed redefinition of the word ‘woman’ would mean that the meaning of woman would be broadened.
It would cease to be a “female of any age” and would include transgender women, who have the protected characteristic of gender reassignment under the Equality Act 2010.
Lady Wise agreed with the submissions made by the Scottish Government’s legal team.
She wrote that developments in the Scottish Government’s legal relationship with legislation passed at Westminster meant that Edinburgh could legislate on the matter.
She said that the proposed changes also didn’t breach the Equality Act 2010.
Lady Wise also wrote that her ruling affected only the 2018 legislation and did not apply to other aspects of the debate surrounding the rights of transgendered people.
In her judgment, Lady Dorrian said Lady Wise’s statement continued to “have force”.
She added: “These observations continue to have force. During the hearing of the reclaiming motion certain submissions were made in respect, for example, of the Gender Recognition Act 2004, critical of the process involved in obtaining a gender recognition certificate.
“Policy issues of this kind are wholly beyond the scope of the case.”