Canoe athletes paddle behind Olympic sign at Deodoro, Rio de Janeiro, Brazil on August 02,2016.
PHOTO: REUTERS
Kuwait was ordered to pay the legal costs of the suit, according to the source.
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The IOC and world football governing body FIFA suspended Kuwait in October over the alleged government interference in sports.
Kuwait now has 30 days to appeal against the ruling, starting from Wednesday.
Officials in Kuwait have said that the country's exclusion from the Rio Games, which start on Friday, was unjust and would cause massive financial losses.
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It sued the IOC in civil court in the Swiss canton of Vaud, where the committee is headquartered in the canton's main city, Lausanne.
Apart from the IOC and FIFA, 16 other international sporting federations have also blacklisted Kuwait.
In January, the Kuwaiti government filed suit in a domestic court seeking damages of $1.3 billion from 15 Kuwaiti sports officials it alleged had actively sought the suspensions.
It is the third time since 2007 where Kuwait have faced suspension from FIFA and the IOC due to government interference in sporting bodies.
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