(LUXEMBOURG) - Europe's highest court gave the European Union three months on Wednesday to inform a Saudi sheik and a Sweden-based foundation why their funds have been frozen or see the measures annulled.

The European Union froze the funds belonging to Yassin Abdullah Kadi and Al Barakaat International Foundation shortly after the 2001 terror attacks in the United States, on suspicions of ties to Al-Qaeda and the Taliban.

However, the Luxembourg-based European Court of Justice ruled that the EU failed to inform them of the grounds for the move which in effect meant that their rights of defence, especially the right to be heard, were "patently not respected."

The court at the same time acknowledged that it was "conceivable" that the measures might be "justified."

"As a result, the court maintains the effects of the regulation for a period of no more than three months running from today, in order to allow the (EU) to remedy the infringements found," it said.

Kadi welcomed the ruling, dismissing the allegations against him as "untrue."

"I am an innocent man. Whenever I have been given a fair opportunity to state my case I have been able to show that the allegations against me are untrue," he said in a statement.

"I reiterate what I have said from the outset: that in all my individual, business and charitable activities I have never supported, nor have I ever intended to support in any manner whatsoever, Osama bin Laden or Al-Qaeda."

Judgment of the Court of Justice in Joined Cases C-402/05 P & C-415/05 P Kadi / EU Council and European Commission

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