This week the US supreme court issued a decision against the Vatican the importance of which has been compared by one lawyer to the fall of the Berlin Wall.

That may sound like an exaggeration, but the court's decision that the Vatican does not have legal immunity in a claim of sexual abuse by a Catholic priest could have far-reaching ramifications for the church.

The case, John V Doe v Holy See, has been filed by a plaintiff (using a pseudonym) who claims to have been sexually abused on several occasions in the mid-1960s by a Roman Catholic priest called Andrew Ronan . The claim was filed back in 2002, and thanks to the court's decision last week, it can finally proceed against the Vatican – allegedly liable because it acted as the priest's employer.

Jeffrey Lena, the US-based lawyer who is defending the Vatican, has argued that the Holy See should not be regarded as an employer of priests because it does not pay them any salary, or benefits, and does not exercise a day-to-day control on their activity.

But the real issue in the case has been immunity. The Vatican attempted to invoke the Foreign Sovereign Immunities Act (FSIA) of 1976, under which foreign states cannot be sued. The supreme court refused to allow this.

The decision last week was, coincidentally, delivered on the same muggy summer's day in which Rome and the Vatican celebrate the feast of Saints Peter and Paul, patrons of Rome.

The religious holiday sees the city shut down and attracts a flood of tourists in St Peter's Basilica, one of the strongest symbols of the terrain power of the Vatican. Many who visit the city learn of the time when, on 20 September 1870, the Pope has lost his temporal power as the Italian army breached the Aurelian Walls at Porta Pia to conquer Rome.

Despite its turbulent history, the political and economic influence of the Vatican has never ended. Avvenire, the Italian bishops' newspaper, predictably describes the supreme court rejection of the immunity claim as "a non-decision". But in reality it is a decision, and a controversial one with the potential to shake the Vatican's foundations and have far-reaching financial and reputational consequences.

In the legal community, the debate on immunity rages on. Most Italian commentators tend to agree that the Vatican is a sovereign entity as it has a marked territory, with Latin as the official language, an independent legal system and its own police body, facts which tend towards giving it the same immunity as states. One of Italy's most famous lawyers, Franzo Grande Stevens, has published an open letter in the newspaper La Stampa saying that the Vatican clearly has an immunity.

But there are others who argue that it is not a member of the United Nations (it has a permanent observer status) and that religious leaders do not usually enjoy an immunity status.

The US supreme court decision paves the way for other suits to be filed against priests accused of paedophilia, which will in turn involve the Vatican. Jeff Anderson, the lawyer representing the claimant, is already understood to have more cases against the Holy See in the pipeline. The combination of potentially thousands of victims in numerous jurisdictions, and the economic incentive for lawyers seek-out cases (particularly in America where so-called "ambulance-chasing" is rife), could result in enough cases to have devastating implications for the church.

The Vatican's response so far has been to deny liability, and last week it said it would prove it can't be held responsible for the priest's actions. But how the law will deal with such strong political, religious and economic powers challenging what is in legal terms an uncertain and evolving area, remains to be seen.

Chiara Albanese is a freelance legal journalist