Daimler AG was ordered on Wednesday to face a U.S. lawsuit alleging it participated in the kidnapping, torture and death of Mercedes-Benz workers in Argentina's Dirty War three decades ago.

A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco revived a seven-year-old case brought by 22 residents of Argentina, including victims of violence and relatives of former workers presumed to have been killed.

The panel said a federal judge erred in 2007 when he decided he lacked jurisdiction, and that the case should be brought in Argentina or Germany, home of Stuttgart-based Daimler . The panel sent the case back to the federal district court in San Jose, California.

Daimler AG intends to appeal this jurisdictional decision, spokesman Han Tjan said in an email. However, no ruling or judgment has been made as to the underlying allegations, which Daimler AG steadfastly denies.

Human rights groups in Argentina have said as many as 30,000 people were killed from 1976 to 1983 in a state-sponsored crackdown on leftist dissent while the country was under a military dictatorship, following the ouster of President Isabel Peron.

In the Daimler case, plaintiffs said Mercedes-Benz collaborated with state security forces in causing the detention, kidnapping, torture or death of workers at the Gonzalez-Catan plant near Buenos Aires.

Our clients were trade union leaders and members in Argentina who were 'disappeared' by national police after the company identified them as troublemakers, Terry Collingsworth, a lawyer for the plaintiffs, said in an interview. Now that we have jurisdiction, we have a straight shot at the merits.

Collingsworth said his clients seek substantial damages.

In the 9th Circuit ruling, Judge Stephen Reinhardt said Daimler, through its Mercedes-Benz unit, had pervasive contacts with California.

He also said Argentine courts would conclude the plaintiffs waited too long to sue, and that it was unclear whether German courts would consider the plaintiffs' claims.

Daimler has not met its burden of presenting a compelling case that the exercise of jurisdiction would not comport with fair play and substantial justice, he said.

The U.S. case was brought under the Alien Tort Claims Act, a 1789 law sometimes used to sue companies in U.S. courts for acts committed abroad.

The case is Bauman et al v. DaimlerChrysler Corp et al, 9th U.S. Circuit Court of Appeals, No. 07-15386.

(Reporting by Jonathan Stempel in New York; Additional reporting by Helen Popper in Buenos Aires; Editing by Bernard Orr)

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