The former England striker told Eagles chairman Simon Jordan that he wanted to move north to be nearer his family, but then joined local rivals Charlton Athletic just days after being released from his Selhurst Park contract.
There was a clause in Dowie's contract with Palace entitling the club to £1m in compensation
Jordan instigated legal action, with Mr Justice Tugendhat finding in his favour at the High Court in London last week.
Dowie has been ordered to pay Palace's legal fees, thought to be around £400,000, and has similar costs of his own.
He may yet have to pay compensation to Palace, with a decision due later in the year over whether the club are entitled to £1m and who should pay it.