Washington – Mobil Corp., the world's biggest oil company, must face a lawsuit by villagers in Indonesia who say the company contributed to human-rights abuses by government security forces.

US Judge Louis Oberdorfer in Washington denied a motion by Irving, Texas-based Exxon to dismiss the suit on sovereignty grounds, saying that US law trumps Indonesia's in deciding which court system should hear the case.

The villagers sued in 2001, claiming Indonesia security forces working for Exxon committed murder, torture and rape in Aceh province, where the company operates a government-owned oil and natural gas field and a pipeline.

The US State Department urged the judge to dismiss the suit in 2002, saying it would violate Indonesia's sovereignty and harm the war on terror.

"The US has an overriding interest in applying its own laws to defendants, all of whom are US companies," Oberdorfer said in his order. "Moreover, US law provides for punitive damages, which are particularly appropriate to apply if the question is whether to sanction US companies."

Indonesia law does not authorize punitive damages. Company spokeswoman Susan Reeves declined to make an immediate comment. Oberdorfer ruled in October that the suit by the villagers could proceed on state law claims, dismissing claims under the federal Alien Tort Claims and Torture Victim Protection acts.

Exxon argued that the case should be dismissed under the constitutional principle that foreign affairs shouldn't be addressed by the courts. It said its conduct in Indonesia was ethical and in compliance with the Southeast Asian nation's laws.

Shares of Exxon, which agreed in September to develop Indonesia's US$2.6 billion Cepu oil field, rose 51 cents to $60.85 in New York Stock Exchange composite trading. They have risen 8.3 percent since the start of the year.