The man, who is now 57 and wishes to remain anonymous, says that as a teenager at the Admont boarding school in Styria during the 1960s, he was severely beaten and seriously injured by two priests.
He claims he was raped, beaten unconscious, forced to have cold showers and to stand on a cold stone floor. He suffered permanent hearing damage as a result, and is claiming €410,000 in damages.
The Klasnic Commission (the church commission investigating sexual abuse) previously awarded the man €25,000 and 100 hours of therapy.
One of the accused priests admitted to the news magazine Profil in 2010 that he was "the man responsible for the hearing impairment", but later withdrew his confession.
"We have achieved our goal, negotiations will continue," Gerhard Hiebler, the victim's lawyer, told the Austrian Press Agency. He added that he had hoped the two priests and the Abbey "would come to their senses", and settle out of court.
The key issue now is to establish exactly when the attacks happened, and if they were outside of school hours.
The Betroffene kirchlicher Gewalt group (for those affected by ecclesiastical violence) welcomed the decision by the Supreme Court and said it hoped this would give the green light for uncovering abuse committed at Admont.