A federal appeals court has cleared the way for a civil suit against former defence secretary Donald Rumsfeld by two Americans who allege they were tortured while being held by the US military in Iraq.

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The three-judge panel upheld a ruling by a lower court judge who denied a Justice Department motion to drop the suit brought by Donald Vance and Nathan Ertell against Rumsfeld in 2006.

Vance and Ertell allege in the suit that they reported to the FBI that they suspected the privately owned Iraqi security company they worked for, Shield Group Security, was paying off an Iraqi sheikh to obtain government contracts.

But when the security company began to suspect their loyalty, they were taken into custody by the US military and held incommunicado at Camp Cropper where they were subjected to violence, sleep deprivation and extremes of light and sound.

They were released without charges -- Ertell after six weeks and Vance after three months.

"If the plaintiffs' allegations are true, two young American civilians were trying to do the right thing by becoming whistle-blowers to the US government, but found themselves detained in prison and tortured by their own government," Judge David Hamilton wrote.

"Beyond the sleep deprivation and the harsh and isolating conditions of their detention, plaintiffs allege, they were physically threatened, abused, and assaulted by the anonymous US officials working as guards.

"They allege, for example, that they experienced 'hooding' and were 'walled,' i.e., slammed into walls while being led blindfolded with towels placed over their heads to interrogation sessions," he said.

The judges also concluded that "plaintiffs have sufficiently alleged that Secretary Rumsfeld acted deliberately in authorizing interrogation techniques that amount to torture. (Whether he actually did so remains to be seen.)"

They said the pleadings, if true, were sufficient to allege that Rumsfeld not only was personally responsible in creating the policies that led to their treatment but that he failed to act to stop torture despite knowing of reports of detainee abuse.

Source: AFA