West Ham United will continue their fight to avoid paying compensation to Sheffield United after the Yorkshire club’s relegation from the Barclays Premier League two years ago, despite losing a High Court battle yesterday.

West Ham have been told that they cannot take the dispute to the Court of Arbitration for Sport (CAS) in Lausanne. The High Court in London sided with Sheffield United’s argument that the CAS does not have jurisdiction because the contracts entered into come under the law in this country and FA rules do not permit an appeal to its arbitration process.

West Ham have lodged an appeal against the temporary injunction granted yesterday and the case will return to the High Court in January, when Sheffield United will be seeking a permanent injunction to end West Ham’s legal route to Europe.

The dispute stems from an arbitration panel ruling in September that West Ham were liable to pay compensation because their signing of Carlos Tévez breached Premier League rules. West Ham finished three points above Sheffield United, with Tévez’s goals instrumental in their survival. Sheffield United have revised the estimate for their loss in income to £60 million to take into account a second year outside the top flight.

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In recent weeks, both sides have been collating evidence to provide an estimate of the cost of relegation. Both parties are scheduled to meet the arbitration panel in March to judge how close they are to agreeing a compensation figure and the process could linger on until the summer. Even then there could be arguments about when and how any compensation is paid. West Ham will want to delay payments until the end of the season, when they will receive fresh television revenue and possible transfer income.

The delay could deter foreign investors from buying West Ham because possible liabilities are unknown. The club, with debts of about £40 million, have effectively been put up for sale by their Icelandic owners because of the effects of the global economic crisis.