The latter has accused Citigroup investment chief David Worsmley of presenting the firm with inaccurate information relating to a rival bid for the company.
Terra Firm stated that Guy Hands, the chairman of the business, was informed that private equity firm Cerebus Capital Management were poised to launch a bid.
This led to the firm paying an over-inflated price of more than Â£4 billion for EMI, it has argued.
In a statement, the Terra Firm said: âWe are pleased that Judge Rakoff has rejected Citiâs attempt to avoid a trial on both of Terra Firmaâs fraud claims.
âWe look forward to the beginning of the trial on October 18th, when Citi will have to answer to a group of New York jurors.â
The judge rejected two allegations of negligent misrepresentation and tortious interference although claims of fraudulent misrepresentation and fraudulent concealment will be heard when the trial goes ahead later in the year.
Citigroup previously argued that there was no evidence available to substantiate the claims.
By Jim Ottewill