Joy's argument was that the sharia court, a parallel legal system governing Muslims on property and family matters, had no jurisdiction over her since she had renounced Islam.
She argued that she had the right to profess the faith of her choice under the federal constitution.
Malaysian law defines ethnic Malays as Muslims and few cases seeking legal recognition of conversions have been successful.
'Faith restoration' camps
1998 Azlina Jailani makes statutory declaration renouncing Islam and is baptised a Christian
1999 Officially changes her name to Lina Joy
2001 Files case in High Court seeking legal recognition of conversion
2004 High Court dismisses case. Judge says matter falls under sharia jurisdiction
2005 Court of Appeal upholds High Court ruling
2007 Federal Court dismisses final appeal
Muslims seeking official recognition of their conversion out of Islam risk being hauled up by religious authorities and sent to "faith restoration" camps where they are expected to "repent" and recant.
Born Azlina Jailani to Malay parents, Joy was raised a Muslim but embraced Christianity when she was 26.
In 1999, she changed her official name to Lina Joy but her identity card still listed her religion as Islam.
The Court of Appeal had in 2005 ruled that the NRD was right in rejecting Joy's application to remove the word "Islam" from her identity card.
She was reportedly baptised in 1998 in a church in the capital, Kuala Lumpur, and recorded her renunciation of Islam through a statutory declaration the same year.
Official recognition would have allowed Joy to legally marry her Christian fiance.
Under Malaysian law, non-Muslims wishing to marry Muslim partners are required to convert to Islam.
But the three-member Federal Court bench delivered the judgment that she could not officially cease to be a Muslim.
Ahmad Fairuz Sheikh Abdul Halim, head of the Malaysian judiciary, and Alauddin Mohd Sheriff delivered the majority decision while Richard Malanjum dissented, almost a year after hearing Joy's final appeal.
S Sharmila, a human rights lawyer and secretary-general of the National Human Rights Society, described Wednesday's ruling as a "very regressive interpretation of the constitution as a living document" and "backward step" for Malaysia.
|The Federal Court ruled that the sharia court |
had jurisdiction despite Joy's conversion [AP]
"If there is any hope left, it is in the resounding dissenting judgement which is based on facts, law and logic," she told Al Jazeera shortly after the ruling was made.
"It is a very bold decision that signals a clear and unequivocal dissent which preserves the fundamental principle to choose one's faith based on the constitutional right of all Malaysians being equal before the law."
She said Malanjum held that the NRD policy was unconstitutional and should be struck down.
The case has triggered fierce debate in a country where just over half the 27 million population are Muslims with a sizeable number of Buddhists, Christians and Hindus.
According to the latest US state department data on Malaysia, ethnic Malays – who are Muslims by law - make up about half the population but are officially grouped together as Bumiputera, or sons of the soil, with indigenous groups who make up 11 per cent of the population, not all of whom are Muslims.
Joy, her fiance and her lawyers have all received death threats, and streets protests have been held by Muslim groups including the Islam-based PAS opposition party.
|Muslims who try to convert legally can be sent |
to "faith restoration" camps [GALLO/GETTY]
Wednesday's ruling is seen as a landmark that will set the precedent for other cases where former Muslims have applied for legal recognition of their conversion to other faiths, several of which are pending in court.
Sa'adiah Din, a sharia lawyer in Kuala Lumpur, said Wednesday's court decision had determined that the country's civil courts do not have jurisdiction over Malaysian Muslims wishing to renounce their faith.
"The crux of this case is whether the apex court is going to uphold the apex law of Malaysia which is the [federal] constitution that guarantees the freedom of religion," she said before the ruling.
In July last year, the government in effect banned all public discussions on religious freedom amid simmering tensions between Muslim groups and rights activists.
The talks had been organised by a coalition called Article 11, named after the clause in the constitution which guarantees freedom of religion for all Malaysians.
Ivy Josiah, the executive director of Women's Aid Organisation (WAO), said the choice of life partners was an issue close to women's hearts.
"The fact that she wants to be a mother and her biological clock is ticking away is terribly unfair to her or anyone else," she said.
"The court obviously did not uphold human rights principles based on the federal constitution, especially on the question of whether we recognise that one has the freedom to choose one's religion and partner."
Josiah said many people, particularly non-Muslims, were concerned that Malaysia was slipping into an unconstitutional situation.