Ex-Eimskip CEO Gylfi Sigfusson has failed in his first attempt to stop a competition probe into the Icelandic boxship company.
He had filed an application in May at Reykjavik district court asking that the investigation by the district prosecutor be ceased.
But the court backed the prosecutor in dismissing his action.
Sigfusson, who was replaced as CEO in January by Vilhelm Mar Thorsteinsson, will now head to the court of appeal in a further bid to halt the probe.
Eimskip said in May it had received a letter from Sigfusson's lawyer regarding the filing of the application.
The prosecutor's investigation is based on the Icelandic Competition Authority’s (ICA) complaint from 2014.
The ICA has been looking into Eimskip since 2010.
Sigfusson, who switched to running Eimskip's operations in the US, argued that the ICA initiated its investigation in an unlawful manner.
Human rights violated?
"Gylfi also bases his case on the argument that the investigation has been conducted in an unlawful manner, violating his human rights protected by the constitution of the Republic of Iceland," Eimskip added.
The former boss claimed the probe is based on evidence gathered by the ICA under threat of administrative fines, after he was reported to the district prosecutor.
He also alleged the prosecutor has investigated matters that do not relate to the competition issues.
Sigfusson claimed the ICA also held back information from the district court when requesting search warrants at Eimskip premises.
"The case is filed by Gylfi Sigfusson in his own name, but Eimskip will watch closely how the case will progress and evaluate how to react as many of the facts pertain to the company’s own case with the Icelandic Competition Authority," Eimskip said.
In July, the shipowner said it had filed a court action at the district court of Reykjavik also seeking to halt the probe.
It argued that the investigation was "formally cancelled" in June 2015.
In 2013, the company said its headquarters and premises occupied by its subsidiaries Eimskip Island and TVG-Zimsen were searched by the ICA.
The substance of the probe has never been revealed.
