Luxembourg - The European Court of First Instance on Thursday annulled an asset freeze wrongly imposed by the European Union on the People's Mujahedin of Iran (PMI), an organization which seeks to bring democracy to Iran.

The decision follows two previous rulings in which the Luxembourg courts said the EU was wrong to keep the PMI's assets frozen, despite the group being taken off a British list of terrorist organizations.

Founded in 1965, the PMI operated a military wing in its early years, but says it renounced violence in June 2001.

Nonetheless, the EU placed it on a list of terrorist organizations whose assets must be frozen in May 2002, and decided to keep it on the list at each regular six-monthly review.

In November 2007, a British court ordered the British government to take the PMI off its list of terrorist groups. Nevertheless, one month later the EU decided to maintain its asset freeze on the organization.

That move went against EU law, the court decided.

"The court finds ... that the contested decision was adopted in breach of the PMI's rights of defence," judges said Thursday.

"Consequently, the court annuls the funds-freezing decision insofar as it concerns the PMI," judges said. (dpa)