Max Schrems, a privacy activist, brought the case questioning whether Facebook data was protected properly.
The courts decision will allow the US government to defend its legislation before the European Court of Justice. The decision comes after the European Commission recently launched Privacy Shield - a new data protection agreement with the US.
The EU law allows data transfers if Facebook can guarantee the information is protected from mass surveillance programmes.
High Court Judge Brian McGovern said that the imposition of restrictions on the transfer of such data could affect US companies significantly.
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