A French court has decided to investigate whether International Monetary Fund chief Christine Lagarde abused her authority when she served as French finance minister, and tried to resolve a legal dispute involving a controversial tycoon.

The court ordered the investigation Thursday after examining the results of a preliminary probe of Lagarde’s actions. Prosecutors accuse her of abusing her authority in 2007 by allowing an arbitration panel to settle a long-running dispute between French tycoon Bernard Tapie and a state-owned bank.

The arbitration panel ultimately awarded more than $400 million in damages to Tapie, a friend of French President Nicolas Sarkozy.

Lagarde stepped down as finance minister in June to assume the role of IMF chief, becoming the first woman to hold one of the top posts in international finance. She replaced Dominique Strauss-Kahn, who quit to face charges of trying to rape a New York hotel maid.