By Brent Kendall

In a legal setback for Exxon Mobil Corp., a federal judge here cleared for trial a seven-year-old lawsuit by Indonesian villagers over alleged killings and torture by Indonesian soldiers guarding a natural-gas plant in the Aceh province.

U.S. District Court Judge Louis F. Oberdorfer ruled Wednesday against a motion to throw out the villagers' suit, finding evidence that the soldiers committed the alleged atrocities and that Exxon Mobil's Indonesia subsidiary had paid for the military security forces to guard the plant.

The villagers filed the lawsuit in 2001, alleging that the oil giant's security forces murdered, tortured, raped and kidnapped local residents. The alleged abuses took place from 1999 to 2001 amid civil unrest in the region.

Exxon Mobil argued that the case should be decided in its favor without a trial. The company said there was insufficient evidence its security forces committed the alleged atrocities. Even if such evidence did exist, Exxon Mobil should not be liable for the military's conduct, the company said.

Rejecting these arguments, Judge Oberdorfer found that a reasonable observer could conclude Exxon Mobil had some control over the military forces and was negligent in managing its security operations. He said company documents appeared to show "unauthorized acts of violence were foreseeable."

A spokeswoman for Exxon Mobil, Margaret Ross, said the company will "vigorously defend against these baseless claims."

"Exxon Mobil condemns human rights violations in any form and has actively expressed these views to governments and others around the world," Ms. Ross said.

The suit's claims, she said, were based on the military's conduct in a civil conflict. "There is no claim that an Exxon Mobil affiliate participated in any human rights violations or any other wrongdoing," she said.

The ruling cited internal communications from Exxon Mobil's Indonesia subsidiary. They included an email that noted "the poor reputation of the Indonesian military, especially in the area of respecting human rights and in their predilection for 'rogue'/clandestine operations."

The judge found that the villagers had provided sufficient evidence to move forward with their case. Exxon Mobil may ultimately be absolved of wrongdoing, but that would be up to a jury, he said in the 30-page ruling.

Agnieszka Fryszman, of Cohen Milstein Hausfeld & Toll LLC in Washington, an attorney representing the villagers, said her clients were ready for a trial. "We have a strong case and can prove to a jury that Exxon is liable," she said.

With Wednesday's ruling, Exxon Mobil has lost three legal bids to have the case thrown out. Much of the evidence and court filings in the case remain under seal, shielded from public view.