The European Union (EU) was wrong to keep the assets of the People's Mujahedin of Iran (PMI) frozen despite the Iranian group being taken off a British list of terrorist organizations, the EU's court ruled on Thursday.

But the group will not yet have access to its funds, as a further decision to continue the asset freeze in July is still under challenge in the court, officials underlined.

The PMI, founded in 1965, is dedicated to replacing Iran's current regime with a democracy. In its early years it operated a military wing, but the group says that 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.

However, the EU decided in July to prolong the asset freeze based on "new information" concerning the group's alleged activities. That decision is under challenge in court.