Egypt went forward with a trial Sunday that has plunged relations with the U.S. into the deepest crisis in decades, prosecuting 16 Americans and 27 other employees of pro-democracy groups on charges they used foreign funds to foment unrest.

After a brief hearing, presiding judge Mahmoud Mohammed Shoukry, who had to step out of the session at one point because of the crush of frantic lawyers and observers, adjourned the proceedings until April 26. The time will allow defence attorneys to familiarize themselves with the case and the details of behind the charges.

"We're pleased that no one was sent into custody or arrested and now [there's] time to fully review the legal files," Charles Dunne, the head of the Middle East programs for Freedom House in Washington, D.C., told CBC News on Saturday.

A few of Dunne's colleagues are among the accused. Dunne said all involved are hoping for a "political solution," especially since Sam LaHood, son of Transportation Secretary Ray LaHood, is among seven Americans banned from leaving Egypt. 

'The main story here is that Egyptian civil society is under attack.'—Charles Dunne, Director of Middle East and North Africa programs for Freedom House

"It's a very high-stakes game that the Egyptian government is playing," noted Dunne, adding that more than 400 Egyptian organizations are also connected to the case.

"The main story here is that Egyptian civil society is under attack."

Behind the scenes, U.S. and Egyptian officials were said to be in intense discussions in an attempt to resolve the case.

Secretary of State Hillary Rodham Clinton has raised the matter twice in person with Egypt's foreign minister — once in London and once in Tunisia — in recent days, according to a senior U.S. official speaking on condition of anonymity due to the delicacy of the discussions.

Speaking to reporters in Morocco on Sunday, Clinton said American officials are evaluating the latest developments, adding that it's "a fluid situation and there are a lot of moving parts."

Sunday's opening session in Cairo quickly descended into chaos as lawyers and journalists crammed into a small courtroom.

The investigation into the four U.S.-based nonprofits, which began in December with a raid by Egyptian security forces on the groups' offices, has put a severe strain on Washington's relationship with Egypt — one of its most pivotal in the Middle East. U.S. officials have threatened to cut off a $1.5 billion US annual aid package if the dispute is not resolved.

U.S. President Barack Obama has urged Egypt's military rulers to drop the investigation, and high-level officials, including Joint Chiefs Chairman Martin Dempsey and Republican Sen. John McCain, have flown in to Cairo to seek a solution.

43 defendants

However, the U.S. cannot be seen as pushing too hard against Egypt's ruling military council, which is viewed as the best hope for a stable transition for a nation that is not just a regional heavyweight, but also the most populous in the Arab world and a lynch pin in Washington's Middle East policy.

There are 43 defendants in the case — 16 Americans, 16 Egyptians, as well as Germans, Palestinians, Serbs and Jordanians.

At least thirteen of the Egyptians appeared in court for Saturday's hearing, standing in a metal cage, as is customary in Egyptian trials.

They listened as chief prosecutor Abdullah Yassin read out the charges before the court, and accused the defendants of engaging in "illegal activities," including political training and polling, that amount to "an infringement on the sovereignty of the state of Egypt."

The Americans, who were not in court on Saturday, work for the International Republican Institute the National Democratic Institute, Freedom House and a group that trains journalists.

Rights groups have sharply criticized the investigation into the civil society groups and the charges, saying they are part of an orchestrated effort by Egyptian authorities to silence critics and cripple civil society groups critical of the military's handling of the country's transition to democracy since the ouster of longtime ruler and close U.S. ally Hosni Mubarak last year.

Egyptian officials counter by saying the trial has nothing to do with the government and is in the judiciary's hands.

Activists blame Mubarak-era laws governing civil society groups that have been used to go after groups critical of state policies.

With files from CBC News