The head of the International Monetary Fund, Christine Lagarde, will stand trial over a state payout to the French tycoon Bernard Tapie, an appeals court has ruled.

She is charged with negligence over the award to Mr Tapie of €404m ($445m; £339m) in 2008 when she was France's economy minister.

Ms Lagarde had appealed against a lower court ruling from December.

She is now expected to appear before a special court for government ministers.

The case stems from Mr Tapie's sale of his majority stake in the sports equipment company, Adidas, which was handled by the state-owned bank, Credit Lyonnais.

The businessman sued for compensation after claiming he was defrauded by the bank and received too little from the sale in 1993.

Ms Lagarde was responsible for the rare decision to appoint an arbitration panel, rather than allowing the courts to decide on the dispute.

She served as economy minister when President Nicolas Sarkozy was in office. Mr Tapie was a supporter of Mr Sarkozy and there were allegations this may have played a role in her decision.

She has always denied any wrongdoing, saying she acted in the interest of the state and with respect for the law.

After learning of the decision by France's highest appeals court, Ms Lagarde's lawyer, Patrick Maisonneuve, said he was convinced that the trial would show she was innocent.

Reacting to the latest ruling, the IMF said the executive board continued to express confidence in her ability to carry out her duties and was being briefed on developments.

Ms Lagarde, who was given a second five-year term as IMF managing director in January, is the third head of the organisation to face legal proceedings.

For his part, Mr Tapie is currently appealing against a French court's decision to dismiss the settlement at the heart of the case.