A US court has dismissed a lawsuit brought against the world’s largest banana supplier by 4,000 Colombians, who accused the company of complicity in the torture and murder of their relatives during the country’s civil war.

Chiquita Brands International, which is based in North Carolina, has previously admitted that it paid $1.7m (£1m) to the United Self-Defence Forces of Colombia, or AUC, a right-wing paramilitary group accused of killing thousands of Colombians between 1997 and 2003. The firm, which formerly operated large plantations in Colombia, claimed it made the payments to prevent threatened violence against its own workers.

But on Thursday, the 11th Circuit Court of Appeals in Florida said the plaintiffs could not sue Chiquita for damages under the alien tort statute (ATS), because the relevant conduct had taken place outside the US. “The torture, if the allegations are taken as true, occurred outside the territorial jurisdiction of the US,” wrote Judge David Sentelle.

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Judge Sentelle acknowledged that the law as it stands made it difficult to combat human rights abuses, but added: “Noble goals cannot expand the jurisdiction of the court granted by statue.”

In her dissenting opinion, Judge Beverly Martin reiterated the plaintiffs’ claims that Chiquita executives “participated in a campaign of torture and murder ... from their corporate offices in the territory of the US”. She went on: “By failing to enforce the ATS under these circumstances, I fear we disarm innocents against American corporations that engage in human rights violations abroad.”

The AUC, a coalition of right-wing militias, was formed in Colombia in 1997 to counter the left-wing guerrilla group Farc. Some 50,000 people are thought to have died during the conflict.

Chiquita, which recently agreed a merger with the Irish fruit supplier Fyffes to create the world’s largest banana firm, admits that it made payments to the AUC through its local subsidiary Banadex between 1997 and 2004, when it sold its Colombian holdings. It claims the payments were made to protect its employees from further violence. In 1995, 28 Chiquita workers had been massacred by militia who stopped their company bus.

The company pleaded guilty to criminal charges in the US in 2007 and was fined $25m by the US government. No executives were charged under the deal, which was negotiated by Chiquita’s then-lawyer Eric Holder, who is now the US attorney general.

Soon after the 2007 settlement, however, the relatives of several thousand plantation workers, political activists and others who allegedly died at the hands of the AUC filed lawsuits in US federal courts, claiming that Chiquita had supplied not only money to the militia, but also weapons and transportation, in return for being allowed to operate unmolested in the region.

Chiquita spokesman Ed Loyd said in a statement that the ruling “reinforces what Chiquita has maintained from the beginning ... that Chiquita is not responsible for the tragic violence that has plagued Colombia”. He added: “The responsibility for the violent crimes committed in that country belongs to the perpetrators, not to the innocent people and companies they extorted.”

Paul Wolf, a lawyer who represented many of the Colombian plaintiffs, said the court’s decision was “another tragedy for the victims of the war”.