Lawyers for the family claimed the evidential test applied by the Crown Prosecution Service - that there should be sufficient evidence for a "realistic prospect" of conviction - is too high a threshold.
It means that, in effect, the decision not to bring a prosecution was based on a conclusion that there was less than a 50 per cent chance of conviction, they argued.
The Strasbourg court said: "The frustration of Mr de Menezes's family at the absence of any individual prosecutions is understandable."
However, its judgment concluded that "it cannot be said that the domestic authorities have failed to discharge the procedural obligation under Article 2 of the Convention to conduct an effective investigation into the shooting of Mr de Menezes which was capable of leading to the establishment of the facts, a determination of whether the force used was or was not justified in the circumstances and of identifying and - if appropriate - punishing those responsible".
