The European Court of Justice (ECJ) has dismissed a case brought by the UK government challenging the 11 countries looking to implement the financial transaction tax (FTT).The UK took the case to Europe’s highest court after arguing that the implementation of the tax, which will not be levied within the UK, would still affect the City of London’s activities.Eleven countries, led by Germany and France, have been pushing for the FTT, also known as the ‘Tobin Tax’, which is being promoted by the European Commission and Parliament.The UK used its veto on tax regulation in the European Union, as the 11 supporters of the tax, known as the EU11, formed an enhanced cooperation agreement allowing implementation in their respective economies. The UK then went to the ECJ looking to annul the European Council’s decision to allow the enhanced cooperation agreement, over fears of an impact on investments in London.However, the ECJ today dismissed the case, arguing that to annul the Council’s move would be irrelevant, as all it allowed was the cooperation.It added that the impact of the tax could not be understood until details were created. “[The case] does not contain any substantive element on the FTT itself,” the court said.“The contested decision contains no provision on the issue of expenditure linked to the implementation of enhanced cooperation. That issue can, therefore, not be examined before the introduction of the FTT.“That being the case, the Court considers that the two arguments put forward by the UK are directed at elements of a potential FTT and not at the authorisation to establish enhanced cooperation, and consequently those arguments must be rejected, and the action must be dismissed.”The UK Treasury said that despite the case’s dismissal, it could still challenge the final proposal for the FTT.However, it runs the risk of not being able to do so without this initial challenge. A UK government spokesman said: “The government is determined to continue to ensure the interests of countries outside the single currency but inside the single market are properly protected as the euro area continues to integrate.”Responding to the decision, a spokesman for the European Commission said it was always confident its case was “legally sound” and gave legitimacy to the EU11.“The Court’s decision gives full legitimacy for the decision to allow 11 member states to proceed with the FTT,” she said.“We carried out a thorough analysis to ensure all the conditions were met [for the cooperation agreement], among which are no negative impact on the rights of non-participating member states.“We have already confirmed the UK would not be negatively affected by a common FTT.”The UK’s National Association of Pension Funds argued that the FTT was ”not the best way to reduce excessive risks or tackle bad behaviour in the markets”.The organisation’s policy lead for EU and international matters, James Walsh, added that the UK government was right to challenge the legality of the proposed tax.He added: “The ECJ is not saying the UK’s challenge is wrong, only that it is premature because the details of the tax are not year clear. By challenging the FTT’s legality now, the UK Government has protected its right to make a more detailed challenge later, once the full proposal is available.”The FTT has been a hotly contested issue in recent months, with the Commission and the EU11 frustrated by delays to the formation of the tax through blockages.European tax commissioner Algirdas Šemeta, in a speech earlier this year, urged Parliament to push on with the tax and fight interventions from “vested interest groups”.