France's highest appeals court has rejected Nicolas Sarkozy's bid to avoid facing  trial over the alleged illegal financing of his failed re-election campaign.

The decision by the 'Cour de Cassation' – France's supreme court of appeal for civil and criminal cases – clears the way for his prosecution over a campaign finance scandal, arising from Mr Sarkozy's re-election effort in 2012, when he lost to his socialist opponent Francois Hollande.

It ends a two-and-a-half year legal effort by Mr Sarkozy to avoid trial over the breach of France's campaign spending limits. It is alleged that a public relations firm was used to funnel money to the political campaign in a way designed to bypass the strict controls. The scandal is popularly known as the 'Bygmalion affair', after the PR company at the center of the scandal. 

Prosecutors allege that $46 million was spent on the campaign, far more than the limit of around $25 million.

No date has yet been set for the criminal trial to begin. If found guilty, the 64-year old retired politician could face up to a year in prison and a fine of just over $4,000.

The court decision came just one day after Mr Sarkozy had been in the public eye at the funeral of former President Jacques Chirac, who was himself convicted of corruption for his activities while Mayor of Paris.

Mr Sarkozy, who served as president from 2007 to 2012, already faces trial for corruption and influence peddling, over alleged attempts to bribe a magistrate. In that case, the prosecution alleges that he dangled a plum job under the nose of the judge, in an effort to extract information about an ongoing criminal investigation into Mr Sarkozy.

The former president is still trying to avoid criminal prosecution in another matter, involving allegations that he accepted 50 million euros from the late Libyan leader Muammar Gaddafi, whose son Said al-Islam Gaddafi later claimed the money was provided to Mr Sarkozy's successful presidential campaign in 2007. Muammar Gaddafi visited France in December 2007, soon after Sarkozy was sworn in.

If found guilty, Mr Sarkozy would become the first president in the history of the republic to be convicted of crimes carried out while holding the nation's highest office.

Mr Sarkozy denies doing anything wrong in all of the cases.