In rejecting an appeal from the trio, who had sought $156 million in damages, the court sided with a lower court that struck down their attempted lawsuit without deciding on its merits.
"It is the province of the motion judge to make factual findings," the Ontario Court of Appeal found.
"We see no basis to interfere with the factual finding."
The students — Khalid Aba-Alkhail, Manal Alsaigh and Waleed AlGhaithy — were either denied advancement or dismissed from the school's neurosurgery program.
They appealed unsuccessfully through the university's various internal processes.
In November 2011, three physicians launched their high-profile lawsuit against the university and 10 others with a 120-page statement of claim.
Among other things, the doctors claimed defamation, conspiracy to injure, negligence and discrimination — a theme some students took up on their behalf.
"As Arabic medical residents they were subjected to unwarranted criticism and disparagement of their work," the suit alleged.
The university, which denied the claims, asked the courts to strike down the suit struck on the basis the residents were essentially arguing the same case as the one the school had already decided.
In April, Ontario Superior Court Justice Timothy Minnema ruled in favour of the school and its internal review process.
"The facts relied on in this action are the same facts relied on by each of the plaintiffs in the steps they took through the appeal mechanism," Minnema wrote.
"This statement of claim is an abuse of the process of the court and the same is dismissed in its entirety."
The students' appeal gained no traction.
Among other reasons, the Appeal Court rejected the idea that students would have no incentive to participate in disciplinary or review proceedings if doing so would stop them from suing.
"We do not agree," the court ruled.
"Seeking damages from the university to obtain redress for complaints about alleged inappropriate treatment would be only a secondary, fall-back goal," the Appeal Court found.
The court ordered them to pay $15,000 in appeal costs.
Minnema had already ordered them to pay $90,000 to the university in relation to the earlier hearing.