Three judges ruled unanimously on Monday that the city awarded a $300-million contract to the Ottawa Sports and Entertainment Group legally.
The appeal court agreed with the original ruling by Justice Charles Hackland that the city acted "in good faith" when it awarded the contract to OSEG in June 2010.
"(Mr. Hackland's) reasons support his conclusion that the by-law did not provide an illegal bonus or procurement as well as his conclusion that the by-law was not passed in bad faith. Accordingly, I would dismiss the appeal," the document states.
FOL's court case has delayed the construction and completion of Lansdowne until at least 2015, the city has said.
The ruling was announced as city staff debated going ahead with construction plans before hearing the court's final verdict.