Campaigners including Peter Wilding, chairman of the pro-Europe pressure group British Influence, and lobbyist Adrian Yalland, had brought the case in the High Court to demand that British Prime Minister Theresa May seek parliamentary approval before taking the UK out of the European Economic Area (EEA), dubbed a so-called soft Brexit.
However, Lord Justice Lloyd Jones and Justice Lewis dismissed the application for a fresh judicial review of the Brexit process.
The UK government's legal team had argued that the application was "premature" because nothing had yet been decided.
"The court is being invited to embark on an exercise which is discretionary... This application is premature and should be dismissed for that reason," James Eadie said, appearing on behalf of David Davis, the minister for exiting the EU.
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The new legal case revolved around Article 127 of the EEA Treaty, which states: "Each contracting party may withdraw from this agreement provided it gives at least 12 months' notice in writing to the other contracting parties."
The Supreme Court had ruled last month that May must seek Parliament's approval before invoking Article 50 of the Lisbon Treaty to begin official talks on leaving the EU after the June 2016 referendum in favour of Brexit.
MPs backed the Bill in a vote in the House of Commons earlier this week and it will now return to the Commons next week before becoming law.