The Canadian branch of the International Relief Fund for the Afflicted and Needy is asking the Federal Court of Canada to set aside Blaney's decision as unconstitutional and affirm its right to solicit funds to pay a lawyer.
The group, known as IRFAN-Canada, was stripped of its charitable status three years ago.
In April, the government added the group to its list of terrorist organizations, saying that between 2005 and 2009 IRFAN-Canada transferred approximately $14.6 million worth of resources to various organizations with links to Hamas.
Any person or group on Canada's terrorist list may have their assets seized, and there are criminal penalties for aiding listed entities with the aim of helping them carry out extremist activities.
That means people are afraid to donate money to the group's legal defence for fear of being prosecuted, said lawyer Yavar Hameed, who is not currently being paid for representing IRFAN-Canada.
"It's sort of a new level of absurdity," he said Thursday in an interview.
The federal anti-terrorism provisions recognize the seriousness of being listed as an extremist entity, but do not ensure a group can actually respond to the accusation, Hameed said. "That contradiction is very stark."
Still, IRFAN-Canada argues the anti-terrorism law doesn't prohibit it from collecting funds for the sole purpose of retaining legal counsel to provide advice and help it challenge the listing before a judge.
In an application filed in Federal Court, IRFAN-Canada says that "out of an abundance of caution" it asked Blaney to confirm this position, or at least grant an exemption so it could raise funds to cover the legal costs of its pending challenge.
The request was informed in part by word from the RCMP to IRFAN-Canada that any funds held in trust for legal services would be frozen and "could not be dealt with" unless a ministerial exemption or court order was granted, the application says.
Blaney told the group late last month he would not authorize an exemption.
In the court application, IRFAN-Canada says Blaney's decision violates Charter of Rights guarantees of fundamental justice, full answer and defence, and the right to retain and instruct counsel.
The federal government has not yet filed a response to the court application. A spokesman for Blaney had no immediate comment Thursday.
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