The rule was waived in 2006 when Madonna was allowed to take her adopted son, David Banda, to London before his adoption was finalised in 2008.
In the ruling, read out outside the court, the judge also voiced concerns about the potential ramifications a ruling in Madonna's favour might have on adopted children's human rights.
"By removing the very safeguard that is supposed to protect our children, the courts by their pronouncements could actually facilitate trafficking of children by some unscrupulous individuals," she said.
The judge also noted that Chifundo had been placed in one of Malawi's best orphanages and no longer suffered the severe poverty endured after her mother died in childbirth.
"It is evident that Chifundo James no longer is subject to the conditions of poverty at her place of birth," she said in the ruling, made at the hearing in Malawi's administrative capital Lilongwe.
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