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The Libyan Investment Authority claimed it lost more than $1 billion (£750 million) on nine trades executed by Goldman Sachs in 2008 on banks such as Citigroup and UniCredit, as well as the French company EDF.
"There was no protected relationship of trust and confidence between Goldman Sachs and the LIA," Mrs Justice Rose said in a London court ruling on Friday.
The LIA was set up in 2006 to invest Libya's oil wealth internationally.
The organisation claims Goldman Sachs took advantage of the low level of financial literacy of LIA staff and suggested large and risky trades that led to heavy losses for it and large margins for the bank. The judge rejected this claim.
"I find that the key people within the LIA discussed the trades," the judge said. "It was not Goldman Sachs's fault."
Lawyers for Goldman Sachs, responding to the claims in court in July, said that the LIA was suffering from "buyers' remorse," and that the bank wasn't responsible for the losses, which happened amid the 2008 credit crunch and financial crisis.
In closing arguments, Goldman Sachs pointed to the fact that the LIA was offered the opportunity to restructure or unwind the trades before taking heavy losses, but chose not too.
Goldman Sachs became close to the LIA after Youssef Kabbaj, a former salesman for the bank, was embedded within the organisation in 2007. Kabbaj befriended Haitem Zarti, the younger brother of a senior LIA official.
Zarti was taken on holiday to Morocco and to a conference in Dubai, where Kabbaj allegedly paid for business-class flights and five-star hotel rooms and, according to the LIA lawyers, procured prostitutes for them both. Zarti was also granted a coveted internship at the bank.
The court heard claims earlier that Kabbaj exchanged texts with a prostitute, known as Michella, to organise entertainment for him and Zarti in Dubai in February 2008, according to LIA's lawyers.