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US citizens Donald Vance and Nathan Ertel said they were held for months by US troops under harsh conditions.


They said they were detained in retaliation for efforts to reveal illegal activities by their employer.


A federal appeals court on Monday ruled that former Pentagon chief Donald Rumsfeld had no immunity in the case.


"Plaintiffs have alleged sufficient facts to show that
Secretary Rumsfeld personally established the relevant policies that
caused the alleged violations of their constitutional rights during
detention," the Seventh Circuit Court of Appeals, based in Chicago,
ruled in a 2-1 decision on Monday that upheld a decision by a lower US
district court.


'Nightmarish scene'
The decision is the second this month in which US judges have
ruled Mr Rumsfeld may be sued by US citizens who alleged torture in Iraq
at the hands of US troops.


Last week, a US district judge in Washington ruled separately
that a former American military contractor who also claims he was
tortured in Iraq could sue Mr Rumsfeld.


The government said the contractor was suspected of helping pass information to the enemy, although he was never charged.


According to court records filed in the latest case, in 2005
and 2006 Mr Vance and Mr Ertel were working in Iraq for Shield Group
Security, a privately-held security company, when they became suspicious
the company was making improper payments to Iraqi officials in exchange
for influence, and that its employees were engaged in illicit
weapons-trafficking and other illegal activity.


The men began feeding information to US government officials
in Iraq until, in April 2006, the company confiscated their credentials
to enter the Baghdad Green Zone, effectively barring them from the
safest part of the war-ravaged country, according to their court
pleadings.


Then, US military personnel detained them, confiscated their
belongings, handcuffed and blindfolded them and took them to a military
base in Baghdad, where they were fingerprinted, strip-searched and
locked in a cage.


They were then taken to Camp Cropper near Baghdad
International Airport, where they "experienced a nightmarish scene in
which they were detained incommunicado, in solitary confinement, and
subjected to physical and psychological torture for the duration of
their imprisonment - Vance for three months and Ertel for six weeks",
the court wrote, reiterating the men's allegations.


'No immunity'
The men claim they were deprived of sleep, food and water,
held in extremely cold cells without warm clothing, and threatened with
beatings.


They were ultimately released at the Baghdad airport and were never charged or designated security risks.


"Vance and Ertel both allege that they were devastated
physically and emotionally by what they endured at the hands of their
own government," the court wrote.


The men later sued Mr Rumsfeld, who was secretary of defence
from 2001 to November 2006 under former President George Bush, and other
unnamed US officials.


In seeking to have the case dismissed, Mr Rumsfeld and the
administrations of Mr Bush and current President Barack Obama argued
among other things that Mr Rumsfeld had immunity for actions taken while
working as defence secretary and that US citizens cannot sue for
violations of their rights that occurred in war zones.


The defendants also argued the courts may not have a say in US military and detention policy.


In rejecting the request to dismiss the case, the court ruled
on Monday the plaintiffs had sufficiently alleged that Mr Rumsfeld had
played a personal role in authorising the harsh treatment to which they
had been subjected while in US custody.


War 'second-guessed'
But the court said it remained to be seen whether Mr Rumsfeld had actually done so.


In a statement, a lawyer for Mr Rumsfeld said the decision to
allow the suit "saps the effectiveness of the military, puts American
soldiers at risk, and shackles federal officials who have a
constitutional duty to protect America".


"Having judges second-guess the decisions made by the armed
forces halfway around the world is no way to wage a war," David Rivkin
said in a statement.


The US justice department could appeal against the ruling to
the full panel of the Seventh Circuit Court of Appeals or to the US
Supreme Court.