Britain was challenging part of the short-selling law which gives the European Securities and Markets Authority the power to ban bets on falling share prices when markets are in turmoil.
"The power of the European Securities and Markets Authority to adopt emergency measures on the financial markets of the member states in order to regulate or prohibit short-selling is compatible with EU law," the Luxembourg-based court said in a statement on Wednesday.
(Read more: EU cracks down on commodity speculation in new deal)
"As all the pleas in law relied on by the United Kingdom have been rejected, the Court dismisses the action in its entirety," it said.
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