The court upheld a ruling from an international arbitrator in London earlier this year that the government failed to adequately protect Nomura's investment from 1998 to 2000 in Czech bank IPB, which later failed.

The government is accused of withholding support for IPB and forcing it to the brink of bankruptcy in 2000 before wresting it from Nomura's control and handing it over to ČSOB only days later.

"From the very beginning, we considered this appeal a public relations gesture on the part of the Czech government," said Jifií Hrabovsk˘, spokesman for Nomura, which is suing for damages. "We welcome this decision, and consider it a victory."

The London arbitrator will now begin to determine just how much the Czech government will have to pay Nomura, though a final figure is not expected to be reached this year.

The Finance Ministry said it would now try to resolve the dispute directly with the Japanese bank rather than wait for the arbitration outcome.

"We will do everything to reduce the threat of 40 billion Kč to a minimum," new Finance Minister Vlastimil Tlust˘ said.

This is not the first time the country has come under fire for not doing enough to protect the investments of foreign companies.

In 2003, a court in Stockholm ordered the Czech government to pay back 14.1 billion Kč in losses sustained by Central European Media Enterprises (CME), a U.S. company based in the Bahamas that established TV Nova in 1994.

The government allowed TV Nova's then-general manager, Vladimír Železn˘, to seize control of the station rather than enforce CME's rights here, the Stockholm court ruled.

In the Nomura case, arbitrators in London said the Czech government discriminated against IPB by shutting it out of 400 billion Kč worth of bailouts it was offering Czech banks in the 1990s to help them clear up debt before being privatized.

That hastened IPB's ruin, they said, and necessitated the government's takeover.