A woman who alleges she was raped and sexually harassed while serving in the New Zealand Navy has had her appeal to bring a New Zealand court case dismissed because of jurisdiction issues.

Former naval officer Hayley Young has also been ordered to pay legal costs for Britain's Ministry of Defence.

She was serving with the New Zealand Navy when she was offered further training through a posting with the UK's Royal Navy.

In evidence presented to the Court of Appeal, she said she was subjected to a culture of sexual harassment including men betting buckets of KFC on whether they could "conquer" female officers by having sex with them.

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She said she received constant and unwanted approaches about sexual activity, which superior officers knew about.

Young said she was physically assaulted twice, once when a British officer raped her in 2009, and once when a male officer placed his hand on her crotch while she was climbing a ladder.

Young brought her case to the Court of Appeal earlier this year, after previously losing a High Court bid to bring a compensation case in both New Zealand and Britain.

She wanted to bring a case on the basis that both the New Zealand and British Defence Forces failed to keep her safe.

In a just-released Court of Appeal decision, the judges ruled that a New Zealand court could not hear her claims, even though she was working for the New Zealand Navy at the time.

"The flaw in this argument is that it confuses the concept of a state's control (or jurisdiction) over service personnel with the concept of the territorial reach (or jurisdiction) of the state," the decision said.

"The fact that the victim of offending in a foreign state is not only a citizen but also a person in the military service of the forum state does not alter the fact that the conduct occurred beyond the forum state's territorial jurisdiction.

"The forum state may indeed exercise control over and owe obligations to its service personnel while they are on service abroad.

"However the forum state does not have power or domain over the wrongdoers and, if they are officers of the foreign state, the foreign state itself."

The Court of Appeal also noted that because both the people alleged to have committed the acts, and the witnesses, were all based in the UK, it would not be able to compel them to give evidence in a New Zealand Court.

The appeal was dismissed, and Young has been ordered to pay legal costs for Britain's Ministry of Defence.