The setback for Prime Minister Theresa May came on Thursday morning as more uncertainty looms over when the UK will leave the EU following the referendum vote in June.
The government had planned to trigger Article 50 of the Lisbon Treaty to commence exit proceedings by the end of March next year.
It will appeal Thursday’s ruling.
Orkney and Shetland MP Carmichael, who was this week appointed to a new select committee overseeing Brexit, said the government’s strategy for leaving the EU is now in “tatters”.
He added that MPs should have the right to vote on the issue.
“Theresa May has got to get a grip and start facing up to the realities of Brexit instead of wishing the difficulties away,” Carmichael said.
“Instead of wasting taxpayers’ money on pursuing an appeal May should tell us when parliament will get its say on this.
“This ruling shows that momentum is with us who wish to see another vote on the terms of Brexit and all parties like the SNP should join us to help protect the UK’s relationship with the EU.
“Although the British people voted for a departure they did not vote for a destination and it is vital that we give the people a vote on the final deal.”
Shetland Islands Council leader Gary Robinson also welcomed the High Court ruling.
He criticised the Prime Minister’s desire to negotiate Britain’s exit from the EU without a vote from MPs.
“I think there has been a serious question around democracy, if the Prime Minister thought she was permitted to take us out of the EU on whichever terms she might please,” Robinson said.
“It seems to be a bit ironic that one of the arguments used against the European project was that it wasn’t democratic, and yet the Prime Minister believes that in spite of a referendum which only just said we should leave the European Union – it was silent on the terms and the agreement – she thought she could deny parliament a vote.
“I think it’s right and proper that MPs have an opportunity to not just debate the issues but to be able to vote on them as well.
“I’ve actually been really concerned about the state of our democracy given some of the statements the Prime Minister, Brexit minister and others have made.”
The SIC leader added that he was “pleased” to see Carmichael appointed to the new Brexit committee.
“It should be very helpful for us to be able to get an islands perspective into the government,” Robinson said.