IMF head Christine Lagarde will stand trial in France over her involvement in a 2008 arbitration case while she was economy minister under Nicholas Sarkozy, the nation's top court ruled Friday.
Lagarde has been investigated for negligence related to an approximately 400-million-euro (440.7-million-dollar) payment to a political supporter, Bernard Tapie, as part of an arbitration agreement between Tapie and the French bank Credit Lyonnais.
Critics have long argued that the deal was too generous to Tapie and have speculated that he only got it because of his political connections. Lagarde has consistently denied wrongdoing, and there has been no indication that Lagarde benefited personally from the transaction.
Lagarde has called the accusations "completely groundless," and even prosecutors recommended dismissing the case last September.
The IMF official appealed to the nation's high court in December to block the case going forward, with Lagarde's lawyer saying she "shared the prosecutors' view that there is no basis for any charge against her."
But the Court of Cassation rejected her appeal on Friday, meaning the case can now go forward.
If she is found guilty, Lagarde could face up to one year in prison and a fine of up to 15,000 euros.
Lagarde has headed the IMF since 2011, taking over from former French finance minister Dominique Strauss-Kahn, who was forced to give up the post following a sex scandal.
Responding to the Court of Cassation decision, the IMF said it did not comment on ongoing judicial proceedings but said it retained confidence in Lagarde.
"The executive board has been briefed on recent developments related to this matter, and continues to express its confidence in the managing director's ability to effectively carry out her duties," the IMF said in a statement.