A Swiss court ruled that the nation's top financial regulator acted in an "unlawful" manner when it forced UBS AG to release client data to U.S. authorities, reigniting a debate over bank-secrecy practices.

The decision, if upheld, could complicate efforts to extract client data by tax authorities in other countries. Private bankers have argued that whittling away Switzerland's banking-privacy laws has led to withdrawals by wealthy individuals.

Nearly one year ago, Finma, the Swiss financial-services regulator, ordered UBS to hand over details on nearly 300 accounts to U.S. authorities in order to settle a tax dispute. The regulator said it had to move quickly because, according to Swiss officials, U.S. authorities were threatening to indict the bank over the tax issue.

Finma argued that a potential indictment was a "clear and present" danger that UBS might not survive. Moreover, Finma added, UBS already had admitted to aiding tax fraud through hidden offshore accounts. The court disagreed, saying Finma had exceeded its authority and should have referred the matter to the government. The government backed Finma's move last February.