BRUSSELS--The European Union's highest court on Thursday upheld a decision that removed Saudi Arabian businessman Yassin Qadi from the EU list of people involved in terrorism, delivering a blow to a counterterrorism program the bloc put in place after the 9/11 attacks.
The decision by the Luxembourg-based European Court of Justice adds fuel to criticism that terrorism lists maintained by the EU, the U.S. and other governments deprive people of due-process rights. Critics have said the processes for getting delisted are opaque and often prevent people from seeing the evidence governments have used to place them on the list.
Once listed, people face a host of sanctions that freeze their assets and prevent them from traveling to the 28-nation EU, among other restrictions.
Mr. Qadi, 58 years old, was placed on the list shortly after 9/11 because U.S. officials believed he was a financier for al Qaeda. Mr. Qadi has repeatedly denied that.
The court said governments face the burden of showing that people belong on the list-- not the other way around-- using information that has been disclosed to them and European courts.
"It is for not the individual to disprove a connection with al Qaeda," said Guy Martin, Mr. Qadi's lawyer. "It is for the institution to put forward convincing information and evidence. Governments have not met that burden since 2001."
Some information can be withheld because of security considerations, but European courts must determine whether governments are justifiably withholding that information, the high court said.
"It is necessary to strike an appropriate balance between the requirements attached to the right to effective judicial protection and those flowing from the security of the EU or its members states or the conduct of their international relations," the court said.
There are 57 people and 25 entities on the EU's terrorism list, as of December 2012, the last time the list was published. Officials at the European Commission, the EU's executive arm, are working now to update the list. There are hundreds of other people on other sanctions lists maintained by the EU-- against people and groups from Syria, Iran and other hot-spot nations.
The ruling could complicate EU procedures used to compile these lists as well, though officials said it was too early to determine the legal implications of the ruling.
The commission is examining the ruling, a spokeswoman said, and declined to comment further.
In the case of Mr. Qadi, a multimillionaire investor from Jeddah, Saudi Arabia, Thursday's decision is the latest victory in a more than 10-year, multijurisdiction battle to remove himself from terrorist lists maintained by various governments and the United Nations Security Council.
"The years when he should have been burgeoning as a businessman have been taken away from him," Mr. Martin said.
His name appeared on the Security Council list shortly after 9/11, in October 2001. U.S. officials put him on the list because they believed the Muwafaq Foundation, an Islamic charity he founded in the 1990s, had been used to funnel money to al Qaeda chief Osama bin Laden.
The EU essentially transcribed the Security Council list into its own law. In 2005, an EU court denied an appeal by Mr. Qadi to have himself delisted, saying the U.N. law held sway over any European laws that might have been violated by placing his name on the terrorism list.
But in 2008, the European Court of Justice struck down sanctions by EU governments based on his presence on the list, saying Mr. Qadi wasn't given the means to challenge his listing in court.
The European Commission then renewed the asset freeze against Mr. Qadi after showing him a summary of the charges against him; that decision too was struck down in 2010 by Europe's General Court. The commission, the European Council and the U.K. appealed that decision.
The high court said on Thursday said that "since no information or evidence has been produced to substantiate the allegations, roundly disputed by Mr. Qadi, of his being involved in activities linked to international terrorism, those allegations are not such as to justify the adoption, at European Union level, of restrictive measures against him."
The U.N. had already come to a similar conclusion in October, when it decided to remove Mr. Qadi's name from the terrorism list. The commission removed Mr. Qadi's name from the list shortly after.
--Laurence Norman contributed to this article.
Write to Matthew Dalton at Matthew.Dalton@dowjones.com