The advocacy group Cage has applied for a judicial review of the actions of the Charity Commission, saying the regulator "exerted unlawful pressure" on two grant-making charities to stop funding it.
Cage, not itself a charity, was the subject of media attention in February when one of its directors, Asim Qureshi, suggested that harassment by MI5 had contributed to the radicalisation of Mohammed Emwazi, who had been named as the Islamic State executioner known as "Jihadi John".
The commission said at the time it was "robustly examining" the decisions of the Joseph Rowntree Charitable Trust and the Roddick Foundation to provide funding to Cage in the past, and that it had opened operational compliance cases on both. A week later it said the JRCT and the Roddick Foundation had confirmed that they would no longer provide funding to Cage, although the JRCT said it had been subject to "intense regulatory pressure".
Cage sought permission from the High Court in London to have a judicial review hearing, but the case has not yet been heard.
Zoe Nicola, an associate lawyer at HMA Solicitors, which represents Cage, said: "The actions of the Charity Commission in this instance will have a chilling effect on the ability of third sector and charitable organisations to engage in controversial debates and are counter-productive."