The Alternative for Germany (AfD) suffered a stinging defeat Monday as a court threw out its bid to stop Germany's intelligence services from investigating it as a suspected right-wing extremist organisation.
The ruling is another blow for the AfD ahead of key EU and regional elections, and comes with the party already reeling from a Chinese spying scandal, as well as claims of links to Russia.
The legal dispute started in 2021 when the domestic intelligence agency, the BfV, labelled the AfD a "suspected" right-wing extremist group, giving authorities more power to gather intelligence on it.
The party challenged the move in the courts but on Monday the Higher Administrative Court in Muenster, western Germany rejected the AfD's appeal.
The party "has no right to demand that the BfV refrain from monitoring it", said the court, adding that existing laws "provide a sufficient legal basis for observation as a suspected case".
The court has been hearing arguments in the case since March.
The AfD's lawyers claimed statements made by its members, which had been collected by the BfV as evidence to support their arguments, were "the aberrations of individuals" and should not be attributed to the party as a whole, which has some 45,000 members.
But the lawyer representing the BfV said the views showed the party's extremism and were "not just the individual opinions of a few people".
They were taken from a large number of statements by high-ranking officials and elected representatives with considerable political influence, and have a "very clear" impact on political life in Germany, the lawyer said.
In 2022 a lower court in Cologne had already dismissed an appeal against the BfV's move to label the AfD a suspected right-wing extremist group, leading the party to turn to the Muenster court.
Posting on X, formerly Twitter, Chancellor Olaf Scholz hailed the ruling as evidence that "our constitutional state protects our democracy -- also against threats from within".
But AfD co-leader Tino Chrupalla suggested the verdict was politically motivated, as it came ahead of next month's European elections in which the party is hoping to make gains.
"You have to take into account the timing of these proceedings," he said. "We are in the middle of the European election campaign... there is clearly a domestic political motivation behind this."
The party said it was considering its next steps, and will likely lodge a further appeal at a court in Leipzig.
Created in 2013 as an anti-euro group before morphing into an anti-immigration party, the AfD last year enjoyed a resurgence as Germany struggled with a surge in migration and a weak economy.
But its popularity has wavered amid the recent scandals, and Monday's verdict will heap further pressure on the party.
As well as the EU elections, the AfD is also eyeing gains at key polls in three eastern German states in September.
Some German media reported Monday the court ruling could clear the way for the intelligence services to take a further step against the AfD by labelling it a "confirmed" right-wing extremist group -- which would give authorities further powers to monitor them.
Several local branches of the party have already been given this classification.
The party's most recent scandal came last month when the aide of Maximilian Krah, an AfD European Parliament lawmaker, was arrested on suspicion of spying for China.
Krah had previously faced Russian propaganda allegations.
In January, an investigation by media group Correctiv indicated AfD members had discussed the idea of mass deportations at a meeting with extremists, leading to a wave of protests across the country.
On Tuesday a court is due to deliver a verdict on whether Bjoern Hoecke, an AfD member and one of Germany's most controversial politicians, deliberately used a Nazi slogan at a rally.
