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Lawyers for Mahmoud Abu Rideh, a Palestinian, were challenging the legality of his control order when Rideh interrupted proceedings and appeared to pull a razor out of his pocket, before threatening to take his own life.
Standing at the back of the court, Rideh said: "I have no human rights in this country. Kill me like they killed Saddam.
"See how many people Blair and Bush have killed. Do you want me to kill myself?"
Rideh then pulled a packet from his pocket, saying: "I have a razor" and indicated that he would cut himself.
The terror suspect's psychiatrist immediately took hold of his arm and, along with his solicitor, took him out of the courtroom.
The hearing was adjourned while security officers were called, and Rideh was seen leaving the court building soon afterwards with members of his legal team.
Later, those with Rideh said he did not really have a razor blade in the court, but made the threat because of the mental pressure he was under.
Rideh has harmed himself on a number of occasions - the last being when he was voluntarily admitted to Charing Cross Hospital before Christmas
As he interrupted the case, his lawyers were in the third day of a hearing designed to prove that the severe restrictions imposed on his daily life under the control order amounted to "inhuman and degrading treatment" and were affecting his mental health. His legal team are seeking a judicial review, arguing that the restrictions contravene the European Convention on Human Rights (ECHR).
His lawyers contend that the effect of the restrictions - including a 12-hour home curfew, no Internet access and a ban on visits from anyone who has not been approved by the Home Office - is inhuman and degrading and a breach of his right to a private life under the ECHR.
Rideh was detained without charge and trial under the Terrorism Act in both Belmarsh prison and Broadmoor psychiatric hospital for three and a half years, before the legislation was found to breach his human rights.
He has now lived at home under the control order restrictions for two years.
The order states that he is a key UK-based contact and provider of financial and logistical support to extreme Islamists with connections to al-Qaeda.
It says: "You belonged to and have provided support for a network of North African extremists directly involved in terrorist planning in the UK, including the use of toxic chemicals."
Rideh denies the allegations. However, two years ago, the Special Immigration Appeals Commission (SIAC) held that Rideh "remains rightly certified as a suspected international terrorist who is, on sound grounds, believed to be a risk to national security".
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