The French Football League (LFP) announced in a statement on Friday that it had been ruled the 27-year-old had played in competitive matches for Hull and Newcastle already this season. Ben Arfa played for Newcastle's developmental side before moving to Hull on loan.
FIFA regulations state that "players may be registered with a maximum of three clubs during one season. During this period, the player is only eligible to play official matches for two clubs".
Nice are able to register Ben Arfa's contract and he can train with the club, but he is ineligible to play in competitive matches.
However, Nice wasted little time in filing an appeal, and the case is expected to be heard early next week.
"An appeal was filed before the administrative court following the decision of the Judicial Committee of the LFP to approve the contract for Hatem Ben Arfa with OGC Nice but prohibit him from playing," Nice said in a statement.
"The hearing should be heard early next week."
Earlier on Friday, the LFP issued a statement which read: "Following the request made by the FFF (French Football Federation) and LFP, the Single Judge of the Players' Status Committee of FIFA has communicated this Friday, January 30 decision.
"He felt that the matches played in England as part of the "U21 Professional Development League" should be considered as official matches within the meaning of Article 5-3 of the Regulations for the Status and Transfer of Players of FIFA.
"Pursuant to this decision, the Legal Committee of the LFP, which met in emergency session this afternoon, has no choice but to prohibit Hatem Ben Arfa to participate in official meetings with the OGC Nice until the end of this season.
"However, pursuant to section 5-3 of the FIFA Rules and Regulations LFP 212 under which "a player may be registered with three successive clubs but can not play official matches for two clubs", the Legal Committee are able to proceed with the registration of Hatem Ben Arfa contract with OGC Nice as desired by the parties.
"The player will be able to train with OGC Nice in secure legal conditions."