BRUSSELS: A prominent Iranian opposition group won an appeal on Thursday against a European Union decision to freeze its funds.

But the group, the People's Mujahedeen, will remain on a European terror list because the decision concerned a blacklist compiled last year, not the most recent list that was compiled this year.

The decision by the European Court of First Instance in Luxembourg follows a ruling in May by the British Court of Appeal that the British government was wrong to include the group on its list of banned terrorist groups. The decision Thursday could increase pressure on the EU to relax its ban on the group.

The EU first placed the group on a terror blacklist in 2002. But the court said Thursday the evidence presented was "manifestly insufficient to provide legal justification for continuing to freeze" the group's funds.

Maryam Rajavi, the president-elect of the National Council of Resistance of Iran, the group's political wing, said in a statement on Thursday that the ruling "puts an end to the unjust label of terrorism."

She accused some European governments of seeking to maintain the ban to nurture good relations with the current leadership of Iran.

The group is regarded as potentially the most important force in the Iranian resistance. Legalization could enable the group to raise money and organize resistance to the ruling ayatollahs in Iran.

According to the EU court, the Iranian group was founded in 1965 with the goal of replacing the government of the Shah of Iran and subsequently its successors with a democracy.

The court said that in the past the group had an armed branch operating in Iran, but noted that the group had renounced all military activity in 2001.