Mogadishu,(insidesomalia.org)- Europe's highest court has overturned a ruling to freeze the funds of a Sweden-based foundation that used to be one of Somalia's biggest money transfer firms.

The European Court of Justice has given the EU three months to inform al-Barakaat International Foundation why its funds were frozen.

The court also overturned the decision to freeze the assets of Saudi businessman Yassin Abdullah Kadi.

EU governments froze the assets in 2001 because of suspected links to al-Qaeda.

The court's decision breaks with a UN ruling ordering member states to freeze the assets of people or groups accused of links to terrorism.

With the chaos and conflict in Somalia, many people survive through funds sent by their relatives abroad, using money transfer agencies.

Somalia has not had an effective national government since 1991 and firms such as al-Barakaat are the closest institutions to banks which still exist.

'Conceivable'

"The rights of the defence, in particular the right to be heard and the right to effective judicial review of those rights were patently not respected," the court said in its ruling.

But it was not immediately clear whether the assets would be released.

The court said it was still "conceivable" that the measures might be justified.

Other groups or individuals have won rulings for similar reasons, but their assets have remained frozen.

EU governments argue that the court rulings do not oblige them to remove people from a blacklist - only to inform them that their assets have been frozen.

Swedish lawyer Thomas Olsson, who represented al-Barakaat, told the AP news agency he would examine ways of having assets released to the Somali immigrants in Sweden who used the network to send funds to relatives in Somalia.

A spokeswoman for the European Commission said the EU would try to rectify its failure to respect the parties' rights of defence.

"We have roughly three months to repair this," she said.

The court's decision overturns an earlier ruling in 2005.

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