The Commission upheld complaints lodged by lawyers for Jon Venables and Robert Thompson, who were both 10 when they killed two-year-old James in 1993. The ruling paves the way for the case to go before a full human rights hearing later this year.
Venables and Thompson were convicted of murder after they abducted James and dragged him for two miles before killing him and leaving his body on a railway track.
James's mother, Denise Fergus, said yesterday that she would "fight until the day I die if I have to" against any moves to review the convictions.
She said: "They say they were unfairly treated - why didn't they stop the case when it was going on, instead of waiting six years before they say it?
"I don't think they were unfairly treated in any way. They had top lawyers, social workers, care workers. They had the best of everything."
Rex Makin, the solicitor who acted for James's father, said the ruling was another "turn of the knife" for the family.
The Commission rejected claims that the court case, in which the boys faced adult criminal procedures, amounted to "inhuman and degrading" treatment. But it agreed that they had been prevented from participating effectively in their trial, violating Article Six of the European Convention on Human Rights.
It also found that the article had been contravened by the sentencing role played by the Home Secretary, who was not "an independent and impartial tribunal".
The Government cannot be compelled to free the boys, but if the full hearing finds that their human rights were breached, it would be forced to change the way it tries children accused of serious crimes in the future.
It could also curb the Home Secretary's future powers to decide the sentencing of convicted minors. The trial judge recommended that the boys should serve a minimum of eight years. This was later increased to 15 years by the then home secretary, Michael Howard. The law lords ruled last year that Mr Howard had acted unlawfully.
In its ruling, the Commission said the pair were placed in a raised dock, as the focus of intense public attention over a period of three weeks, and said it was "significant" that neither child gave evidence.
But Albert Kirby, the detective superintendent who headed the investigation, said the dock was raised so the boys could see what was going on. "Even the parents [of the defendants] were very grateful for all the work we did," he said.
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