The official score showed the female fencer, A Lam Shin, lost 5-6 in overtime to Germany's Britta Heidemann in the sport's individual epee discipline.
But timing equipment had not been activated toward the end of the semi-final, allowing Heidemann extra time to register points.
Had the contest ended 5-5, Lam would have advanced to the final.
The result left Lam in tears and prompted her coaches to file an appeal, which happened to be delayed due to the failure of the team to include a payment with it.
South Korea's Shin A Lam is escorted by officials out of the field. Photo: AFP
"It was most likely that there was some failure with the equipment or the button had been pressed in time," said general secretary Maxim Paramonov.
"We were confronted by a dilemma: to take the right decision from a human point of view or the right decision from the point of view of fencing rules, which aren't perfect. The technical committee decided to take the second route."
Paramonov said he regrets the fact that the sport depends on "such equipment".
"But the technical committee made the right decision," which he said was final.
Lam Shin, meanwhile, proceeded to the bronze medal match, where she lost to China's Yujie Sun.