The failed Icelandic bank had brought a “strike-out” action in a bid to block the legal challenge by property tycoons Vincent and Robert Tchenguiz.
But today the move was dismissed by Justice Michael Burton, the BBC reports.
The two entrepreneurs were among the bank’s biggest borrowers when it collapsed in 2008, leading it to seize assets used to secure the loans.
A previous attempt by the brothers to sue the bank through the Icelandic courts was thrown out.
Kaupthing says it did not accept the court’s decision, which it says was made on “technical grounds” in a statement on its website.
The Anglo-Iranian pair were briefly arrested and questioned by British police and the Serious Fraud Office earlier last week over their role in Kaupthing’s failure.
Kaupthing said the substantive question of whether the bank was liable to the Tchenguiz family trustee was not considered by the UK court, maintaining this was in any case not a question for the UK courts to decide.
“Should the English court proceed to give a substantive judgement concerning the merits of the trustee’s claims, such judgement will not have direct impact in Iceland nor will it be binding on the Icelandic courts,” said the statement.
“The Icelandic courts will decide independently if the claims against Kaupthing are valid.”
Since then, some of the holding companies behind Vincent Tchenguiz’s Peverel Group have gone into administration, after Bank of America Merrill Lynch asked the group to repay a loan of £125m.
