This file combination of photos shows IMF Managing Director Christine Lagarde and French tycoon Bernard Tapie.

Agencies/Paris

A French court has ordered Christine Lagarde, the head of the International Monetary Fund (IMF), to face trial over her role in a payout of some €400mn ($434mn) to businessman Bernard Tapie, her lawyer said on Thursday.

The case will be heard by magistrates at the Cour de justice de la Republique - which judges ministers for crimes in office, France's prosecutor general confirmed.

The decision came despite the prosecutor's recommendation in September that investigations be dropped against Lagarde for alleged negligence in the affair while she was France's finance minister.

Lagarde's lawyer, Yves Repiquet, said he would be recommending that she appeal against the decision, which would bring her to court over an affair that dates back more than 20 years.

"It's incomprehensible," Repiquet said on French TV channel iTele. "I will recommend Lagarde appeal this decision."

While Lagarde was finance minister, Tapie won French government compensation after selling his stake in sports company Adidas to Credit Lyonnais in 1993. He claimed the now defunct bank had defrauded him after it later resold his stake for a much higher sum.

Earlier this month, a French court dismissed Tapie's demand for a further payout of over €1bn, ordering him instead to pay back the original compensation.

Lagarde said in a statement that she would fight the trial order.

Meanwhile the IMF’s executive board, representing 188 member nations, “continues to express its confidence in the managing director’s ability to effectively carry out her duties,” spokesman Gerry Rice said in a statement.

The scandal is not the first to taint the top office of the financial institution.

Former French chief Dominique Strauss-Kahn was forced to step down in 2011 after being accused of sexual assault by a New York hotel maid.