EU court overturns freeze on Iran group's funds

LUXEMBOURG, Dec 12 (Reuters) Europe's second-highest court today annulled an EU decision freezing the funds of an exiled Iranian opposition group that argues it was wrongly placed on the European Union's list of terrorist organisations.

The decision is likely to infuriate Tehran and may have wider implications for the EU's policy of banning alleged terrorist groups and freezing their assets.

EU member states ordered the freezing of funds of the People's Mujahideen (OMPI) in 2002. The armed wing of the France-based National Council of Resistance of Iran (NCRI) has stated that it has renounced military activity since 2001.

In a ruling on a case brought by the Iranian opposition, the European Court of First Instance said: ''The court finds that the decision ordering the freezing of the OMPI's funds does not contain a sufficient statement of reason and that it was adopted in the course of a procedure during which the right of the party concerned to a fair hearing was not observed.

''Accordingly that decision must be annulled insofar as it concerns the OMPI,'' it said in a decision open to appeal before the higher European Court of Justice.

ECJ decisions are binding on member states, but would not preclude decisions by individual governments to keep the group on their own terror lists.

An NCRI spokesman called the court decision ''a great victory''.

''The court very clearly has dismissed the decision by the EU Council of Ministers and the relevant consequences of that decision,'' said Farzin Hashemi, a member of the movement's Foreign Affairs Committee.

An EU spokeswoman declined immediate comment on the ruling, saying legal experts were studying the judgment.

The Iranian government had used the EU decision to justify repression of OMPI sympathisers in Iran and to try to restrict its activities abroad, he said.

Despite being labelled a terrorist group in the EU and the United States, the OMPI has devoted followers on both continents and was first to expose Iran's covert nuclear programme.

However, diplomats and Iran analysts say it has little support within Iran, where few can forgive its siding with Saddam Hussein in the 1980-88 Iran-Iraq war.

The NCRI complained that the group was added to the EU terrorist list under pressure from Tehran at a time when Western countries were seeking to improve relations with Iran.

The movement argued that the EU decision had breached its right to defend itself and failed to take into account the right to revolt against tyranny and oppression.

Reuters SHB VV1601