The General Court of the EU annulled measures taken against the Liberation Tigers of Tamil Eelam (LTTE) last week, which listed the Sri Lankan rebel group as a terrorist organisation and froze its funds.
However, the court allows the freezing of Tamil Tiger funds to be maintained for three more months.
The court also ruled that the EU law on the prevention of terrorism can apply in situations of armed conflict under international humanitarian law thereby rejecting a claim made by the Tamil Tigers.
The LTTE waged a three-decade war in Sri Lanka, fighting for a separate homeland. They were militarily defeated by the Sri Lankan government in 2009.