Banning Palestine Action has damaged confidence in anti-terrorism laws and increased the group’s publicity rather than diminished it, lawyers for co-founder Huda Ammori have told the Supreme Court.

Opening her challenge to last year’s proscription, they argued that the decision was disproportionate and had prompted unprecedented civil disobedience by otherwise law-abiding protesters. A coalition of Jewish groups, however, argued that Palestine Action’s increasingly serious activities threatened mainstream Jewish community institutions.

Five justices are hearing the case. Ammori’s lawyers said no other protest organisation had been treated this way, and the court had never previously considered whether such a ban was compatible with freedom of speech and protest.

The consequences extend beyond the organisation. Home Office figures indicate more than 4,000 arrests at protests involving signs supporting Palestine Action, although many demonstrators have been arrested repeatedly. Prosecutors have authorised 1,200 charges; those trials remain in limbo pending the outcome. The Metropolitan Police said 27 protesters were arrested outside the court on Wednesday.

Ammori’s team said thousands of elderly protesters, many veterans of other radical causes, had been arrested. Henry Blaxland KC argued that the ban had increased publicity and strengthened the group’s public profile: “All it's done is to pour fuel on to a fire of one of the most publicly-contested issues of our time”.

Her lawyers accepted that Palestine Action was not an ordinary, peaceful protest group. Members had occupied or vandalised firms linked to Israel’s military. But Raza Husain KC said only three of 385 incidents over five years had been assessed by the Home Secretary as terrorism offences. He argued that existing criminal powers were sufficient, while government experts considered most damage minor, involving graffiti, petty vandalism, occupations and lock-ons.

UK terrorism law includes serious property damage for a cause. Criminal courts have described at least two defence-firm break-ins as causing millions in damage. One member was jailed for fracturing a police officer’s back with a sledgehammer; the court heard that the group had never advocated such violence.

Free speech campaigners submitted that the ban infringed protest rights. For Jewish communal groups, Adam Wagner KC said the Court of Appeal had rightly found Palestine Action violent and concerned in terrorism. He argued that covert, escalating attacks had expanded beyond Elbit, whose parent company is Israeli, towards people and institutions deemed “Zionist”. Given most British Jews’ and Jewish institutions’ connections with Israel, he said, this threatened the mainstream community.

The central distinction is between prosecuting criminal acts and justifying a terrorism ban on the organisation. The hearing continues on Thursday, with judgment expected later.