The court ruled that fairground entrepreneur Marcel Campion had brought his case too late.
His contract with the city expired in October and the court declared it could not pass judgement on contracts that have expired.
Campion has been locked in conflict with Paris city council since July when it voted unanimously to scrap the annual Christmas market, an event that sees stalls selling gingerbread, foie gras, knick-knacks and other seasonal attractions lined along the avenue's pavement.
As well as going to court, he and the stallholders took direct action, obstructing traffic on the Paris ring road and motorways leading to the capital in protest at the decision.
Security, aesthetics and quality
The council has given various reasons for its decision.
The avenue, often referred to by French media as the most beautiful street in the world, is "an exceptional site", she said, adding that she wished to return to the "linear aesthetic" of planner André Le Nôtre.
More recently the council has claimed that the goods on sale and the amusements provided are of "mediocre quality", leading Campion to accuse it of "doublespeak".
He claims that 240 traders take part in the market and that it creates 2,000 jobs.
Other fairs and markets have also been scrapped and Macron accuses the city council of turning its back on small stallholders as it seals a deal with LVMH boss Bernard Arnault to open an amusement park on the Bois de Boulogne, the huge green space on the western edge of the city.
Paris big wheel spat
The city council has also clashed with Campion over the Ferris wheel placed each year since the beginning of the century on the Place de la Concorde, the square at the foot of the Champs Elysées.
Officials are proposing to scrap it as from next year, again for alleged aesthetic reasons, arguing that it disrupts the "historic" view from the Louvre museum to the Arc de Triomphe for six months ever year.
But there are also legal considerations.
Last week Paris city council was charged with favouritism towards none other than the aforementioned Marcel Campion.
The entrepreneur himself was charged with profiting from favouritism in May, leading his lawyers to claim that the whole row is an attempt by municipal authorities to distance themselves from him.
Although a wheel has been erected on the square each year, it has not actually always been the same one.
One model was sold second-hand to the British city of Birmingham in 2003, although the organisers omitted to change the commentary the first year, leaving bewildered passengers listening to a French version describing the sights of the French capital.
Campion is a colourful character.
Known as the "King of the showmen", he has risen from a deprived childhood to become a wealthy businessman with his own peculiar negotiating techniques.
One of his favourite methods of obtaining permission to organise a fair is to occupy his preferred site and negotiate with the relevant authorities afterwards.
In September, as his spat with Paris municipal authorities approached its climax, he announced that his supporters would be joining trade union demonstrations against President Emmanuel Macron's labour law reform, posting a statement on an anarchist-linked website promising to be "in the forefront of all demonstrations of social discontent".
That raised eyebrows in the French media, given that during this year's presidential race he backed far-right candidate Marine Le Pen, a declared supporter of the Christmas market, and has invited members of her National Front to parties at his residence in the Mediterranean resort of Saint Tropez.
Political consistency is perhaps not Campion's strong point, however.
During the 2014 local elections he backed Anne Hidalgo and the Socialists.