Last year, Hortefeux was convicted of mocking the Arab origins of a young member of Sarkozy's ruling party, in an incident that was caught on video and became a viral video hit and an embarrassment to the government.
But, on Thursday, the Paris appeals court found fault with the way in which the country's best known anti-racist organisation had been assigned as a civil plaintiff in the case, and threw out the case -- a de facto aquittal.
The group, the Movement Against Racism and for Friendship Between Peoples (MRAP), insisted that the court had not directly questioned the racism charge, and warned that it plans to appeal the ruling in a higher court.
Hortefeux was interior minister at the time of the incident, but he has since stood down to work as a political adviser to Sarkozy, and is expected to play a leading role in his leader's campaign for re-election next year.
At the summer 2009 UMP party conference, Hortefeux posed for a picture with a party member of North African descent and joked: "You always need one. When there's one, that's OK. It's when there's a lot of them you have problems."
Most of the tens of thousands of viewers who saw the footage interpreted the remark as a slight on the young man's origins, but the minister insisted he had been affectionately joking about his coming from the predominantly agricultural Auvergne region.
The target of the comment, 22-year-old Amine Benalia-Brouch, initially defended Hortefeux, insisting he had not been insulted, but later left the UMP and said he had been pressured into making his statement by party officials.