The ruling is a boost for President Francois Hollande, who has opposed the technology alongside ecologist Greens in his ruling coalition – to the dismay of some allies who believe France is sacrificing access to a cheap source of energy.
U.S-based firm Schuepbach Energy had challenged on four counts a ban introduced in 2011 due to potential risks to the environment, which led to two of its exploration permits being cancelled in southern France.
“The constitutional council threw out these four complaints and ruled that the disputed components of the July 13, 2011 law comply with the constitution,” the court said in a statement.
The Constitutional Council, made up of judges and former French presidents, has the power to annul laws if they are deemed to be unconstitutional.
The International Energy Agency has named France as a European country with some of the most plentiful underground reserves of shale gas.
However “fracking” was banned in France under former President Nicolas Sarkozy on concerns it could pollute groundwater and trigger earthquakes, bringing to a halt the nascent shale oil and gas industry in France.
After France put the ban in place, Schuepbach Energy said it had no alternative way to carry out the exploration, which led to the suspension of its two permits in the south of France.
French oil major Total is still awaiting a ruling after it separately appealed at the end of 2011 the government’s decision to ban its own exploration permit by the southeastern town of Montelimar.
Industry Minister Arnaud Montebourg stirred debate earlier this year when he suggested creating a state-backed company to examine alternative exploration techniques.