The EU slapped sanctions on Russia after Crimea declared independence from Ukraine on March 17, 2014 and formally applied to become part of Russia following a referendum.
The European Court of Justice (ECJ) said "restrictive measures ... in response to the crisis in Ukraine against certain Russian undertakings, including Rosneft, are valid."
With the ruling, the ECJ established its jurisdiction to rule on matters of the EU's common foreign and security policy, an area of fierce contention between Brussels and national governments seeking to maintain sovereignty.
The court said it believed encroaching on Rosneft's right to do business was in proportion with the severity of sanctions imposed on Russia over the Ukraine crisis, Reuters reported.
"The Court holds that the importance of the objectives pursued by the contested acts is such as to justify certain operators being adversely affected," it said in its judgment.