A dispute between the N.B.A. and the players union over Jeremy Lin’s so-called Bird rights could spill into July, clouding the Knicks’ free-agency agenda and creating potential chaos for all parties.

An arbitrator on Friday ruled that Lin was entitled to his “early Bird” rights and thus eligible to re-sign with the Knicks without the use of other salary-cap exceptions. The ruling also applied to the Knicks’ Steve Novak who, like Lin, was claimed off waivers this season.

It was a victory for the union and, by extension, the Knicks, who stood to benefit from the added payroll flexibility. But the celebration was short-lived. The N.B.A. later announced that it would appeal the ruling — a process that could take days or weeks. Free agency opens July 1.

The league has 10 days to file its appeal. Once it does, league and union officials must agree to a three-member panel. A hearing would be held, and the panel would have up to 30 days to issue a decision.