Arjan Erkel, 38, a former head of the aid organization's branch in Daghestan, was taken hostage in the republic's capital of Makhachkala in August 2002. Erkel was held captive for around 20 months before Russian secret services set him free in April 2004.
The court upheld an appeal by the Dutch government against the group, also known as Doctors Without Borders, signaling an end to the four-year judicial row between the two sides.
The abductors had demanded 1 million euros for Erkel's release. MSF put up 230,000 euros, while the Dutch Foreign Ministry contributed 770,000 euros. It said 270,000 of that was a loan to MSF, which the group denied.
After Erkel was released, the Dutch government twice demanded the organization pay the rest of the sum, losing lower court rulings in March 2007 and February 2008. MSF insisted there was no repayment agreement and asked to be reimbursed for the 230,000 euros it had paid, a claim it has now had denied.