From the sound of things they are just grasping at straws. The technical regs don't seem to leave much grey area in the matter, so I personally think the cause is already lost. Unless AM can prove that they have a system that conforms to regs and has somehow been damaged of malfunctioned, they are going to be stuck.
I think they are just bluffing on the appeal myself, but really in the grand scheme of things they already have plenty of cash and lawyers, so the possible grab at a few more points might be worth a roll of the dice.