Those claims, the court said in its opinion, instead “belong to A.I.G., which has exercised its business judgment and declined to prosecute this lawsuit.”
The fight is over the government’s decision to take a 79.9 percent stake in A.I.G. as a condition of giving it an $85 billion emergency loan nearly nine years ago, under terms that Mr. Greenberg’s lawyers argued were meant to punish the company.
Mr. Greenberg’s legal team, led by David Boies, argued the government did not compensate A.I.G. shareholders enough for the stake it took, which prevented the collapse of their company.
In June 2015, the United States Court of Federal Claims ruled that the Federal Reserve had overstepped its authority in taking the stake in A.I.G. but said no damages were warranted.
The lower court’s ruling had led some legal scholars to fear that it could tie the government’s hands in future financial crises. The danger was that it “could limit the government’s ability to be flexible” in another dire situation, said Carl W. Tobias, a law professor at the University of Richmond. “This wipes away a precedent that could be valuable in the future.”
In arguing their appeal last fall, the government’s lawyers said doing nothing would have punished A.I.G. shareholders more by erasing the value of their stock in a bankruptcy filing. The lower court ruled that the bailout helped shareholders avoid this fate.
In its opinion on Tuesday, the appeals court said, “Outside third parties with leverage over a transaction, even in a take-it-or-leave-it scenario, do not necessarily have a responsibility to protect the interests of a counterparty, less so the interests of a counterparty’s constituents.”
Mr. Boies said he would ask the Supreme Court to review the decision.
“The trial court found that the government had improperly and unconstitutionally confiscated 80 percent of the A.I.G. shareholders’ equity during the 2008 financial crisis,” he said in a statement. “The court of appeals, without disagreeing with that finding, holds that the shareholders have no remedy and that the government is entitled to retain more than $18 billion in ill-gotten gains. We respectfully disagree.”
A spokesman for the Federal Reserve Board said “we are pleased” that the appeals court vacated the lower court’s decision.
The government’s loan to A.I.G. was the largest ever made, according to the opinion on Tuesday. The company repaid the loan and $6.7 billion in interest and fees, but the bailout ultimately cost more than $180 billion in taxpayers’ money.
Starr International’s attempt to recover more money for shareholders struck many critics at the time as tone-deaf. It came amid public anger that financial institutions were not being held accountable enough…