Barclays has emerged victorious in a long-running legal battle over its actions on the eve of the credit crisis, during which it allegedly dumped hundreds of millions of dollars of toxic mortgage assets on to unsuspecting investors.

The New York Supreme Court approved the dismissal of a lawsuit from the French fund manager Oddo Asset Management, which said Barclays had used off-balance-sheet vehicles as a "dumping ground" for mortgage assets that the bank knew were about to plunge in value.

The case involving the British bank was one of hundreds working its way through the US legal system.

Supreme Court Justice Barbara Kapnick had ruled last year that there was no case for Barclays to answer. "As Barclays contends, Oddo is a sophisticated entity in the position of appreciating the inherent risks associated with debt securities, including the fact that, under certain circumstances, interest payments may cease and the principal may be lost," she wrote then.

And last week, a Supreme Court panel turned down Oddo's appeal, saying there was no evidence of a breach of fiduciary duty by Barclays or by Standard & Poor's, which gave a credit rating to the controversial vehicles, and whose parent company, McGraw Hill, was also dismissed from the suit. Barclays said on Friday: "We are pleased with the court's ruling."

The attorney for Oddo, Geoffrey Jarvis, said the company would consider an application to appeal the Supreme Court's rulings. In New York, there is a further appeals court that sits above the Supreme Court's appellate division.

The case centred on the collapse of two investment vehicles, Mainsail and Golden Key, in August 2007, in which Oddo lost its entire $50m investment. Just two months earlier, the vehicles purchased, at face value, several hundred million dollars of mortgage derivatives that had previously been sitting on Barclays' balance sheet.

Oddo claimed that although both vehicles were ostensibly managed independently, Barclays manipulated them to get them to buy mortgage assets at what the bank knew were inflated prices.

At the time of the sale, in June 2007, US house prices had begun to fall and some hedge funds that had invested in mortgage assets were already in difficulties.