BRUSSELS—A decision on Tuesday by the European Union’s top court expanded the body of EU case law restricting certain Muslim practices, as the continent’s Muslim population grows and compatibility with the bloc’s laws is increasingly tested.

The Luxembourg-based European Court of Justice ruled that halal meat can’t be labeled organic because the ritual Muslim slaughtering isn’t in line with the EU’s animal-welfare rights. The ruling, which contrasts with U.S. regulations, also applies to kosher slaughter methods.