A hooded and wired Iraqi prisoner is seen at the Abu Ghraib prison near Baghdad, Iraq in this undated photo. The New Yorker/AP

"Today's court ruling affirms that U.S. corporations are not entitled to impunity for torture and war crimes and that holding U.S. entities accountable for human rights violations strengthens this country's relationship to the international community and basic human rights principles," Center for Constitutional Rights legal director and lawyer for the detainees Baher Azmy said in a press release Monday.

CACI employees had conducted interrogation and other services at Abu Ghraib. In the lawsuit, they were accused of directing or encouraging torture in 2003 and 2004, while managers were accused of covering it up.

"Anyone who commits egregious human rights violations should be held accountable, and this decision puts U.S. companies on notice that they could still face liability," Martin Flaherty, a professor at Fordham University School of Law who signed a brief supporting the detainees, said in an interview.

CACI has called the lawsuit baseless. The Arlington, Virginia-based company did not immediately respond to requests for comment.

Photos depicting the abuse of Abu Ghraib detainees emerged in 2004. Some detainees said they endured physical and sexual abuse, infliction of electric shocks and mock executions.

At issue was the Alien Tort Statute, a 1789 U.S. law often used to pursue claims over human rights abuses in U.S. courts. While the U.S. Supreme Court narrowed the law's reach in 2013, Circuit Judge Barbara Milano Keenan wrote for a three-judge 4th Circuit panel that the Iraqi plaintiffs' claims "touch and concern" the United States enough to let them go forward.

Keenan also said Congress has a "distinct interest" in not turning the United States into a "safe harbor" for torturers.