Annette O'Connor claimed she had been injured after a hotel manager directed her where to sit at a table.
A Dublin High Court judge increased her damages award on appeal on Thursday.
The Restaurants Association of Ireland said the case would mean insurance costs will increase for the sector.
The Irish Times reported that Mrs O'Connor claimed she had been directed to a table in the Mullingar Park Hotel in County Westmeath in March 2011, where a leg concealed by a tablecloth constituted a "trap".
The 48-year-old hairdresser, from Santry in Dublin, said she was not given any warning that the leg was hidden before she injured her left knee as she sat down and pulled her chair towards the table.
Adrian Cummins, the chief executive of the Restaurants Association of Ireland, described the case as "bizarre" and said it would result in serious repercussions for hospitality businesses.
He said: "I haven't seen a floating table with no legs in my life - how do you counteract a customer going into a restaurant, hitting their knee off a table and suing you?
"In that case, the woman got 20,000 euros, but the legal costs were about 200,000 euros.
"Insurance premiums will go up for that business, but they'll go up for our entire sector as well because we're now seen as being high-risk.
"Our members are up in arms and they're extremely distressed - they are wondering why we're being targeted and penalised for this."
Mr Cummins said that insurance costs for restaurants can rise by as much as 300% after personal injury claims are made against them.
Many businesses do not have the resources to fight claims in the courts, he added, and insurance rises can mean "close-the-doors time" for them.
"If you're a small business and your insurance cost goes up by 300% you have to cut back in other areas, either by cutting your staff numbers or you have to increase your prices."
Judges in the Republic of Ireland are "not using common sense" in dealing with personal injury claims, Mr Cummins claimed.
He called on the government to take steps to save hospitality businesses from a "claims culture that's spiralling out of control".
"The way that personal injury cases are handled needs to be changed," he added.
"Take it away from the judges and put it through an assessment board - they could make a common-sense deliberation and judgement on it.
"Our government needs to deal with this in a pragmatic way, quickly and efficiently.
"If they don't, businesses will suffer - that's the bottom line."
Irish restaurants and hotels have been "up in arms" since a woman was awarded 20,000 euros (Â£17,000) after hitting her knee against a table as she sat down to dinner, a trade body has said.