By Terry Baynes

(Reuters) - A U.S. appeals court on Friday revived two lawsuits accusing employees of two defense contractors of conspiring to torture and abuse Iraqis detained at the Abu Ghraib prison near Baghdad and at other locations.

A 14-judge panel of the U.S. Court of Appeals for the 4th Circuit, based in Richmond, Virginia, refused to intervene and dismiss the suits against CACI International Inc and L-3 Communications Holdings Inc, sending the cases back to district courts for further proceedings.

After the military invasion of Iraq in 2003, the United States hired contractors from U.S.-based CACI and L-3 to provide translators and help conduct investigations. In 2004, photographs emerged depicting the abuse of detainees at Abu Ghraib prison. A number of military personnel were disciplined, but no contractors were charged.

In 2008, a number of Iraqis filed suits against CACI and L-3, accusing their employees of inflicting physical and sexual abuse, electric shocks and mock executions on prisoners.

District courts in Virginia and Maryland rejected the companies' attempts to dismiss the suits. The companies had filed an interim appeal, before the cases could proceed, asking the 4th Circuit to throw out the claims. They pointed to a 2009 ruling by a federal appeals court in Washington, D.C., that had dismissed a similar suit against the companies -- a decision the U.S. Supreme Court allowed to stand.

In September 2011, a split three-judge panel of the 4th Circuit ruled in the companies' favor, finding that the companies had immunity as government contractors and that the claims were pre-empted by U.S. national security and foreign policy law.

But after agreeing to reconsider the appeal, a larger panel of the 4th Circuit reached the opposite conclusion on Friday in a 12-2 decision that splintered the court, drawing five separate opinions. The companies did not qualify for an immediate appeal, and their claims of immunity needed to be developed through the discovery of evidence, the majority concluded.

Accepting the early appeal would "undermine efficient judicial administration and encroach upon the prerogatives of district court judges, who play a special role in managing ongoing litigation," Judge Robert King wrote for the majority.

Two judges dissented in separate opinions. The majority's ruling "inflicts significant damage on the separation of powers, allowing civil tort suits to invade theaters of armed conflict," Judge J. Harvie Wilkinson wrote, arguing for the defense contractors' immunity.

A spokeswoman for CACI said the company was reviewing the ruling and declined to comment. L-3 did not immediately respond to a request for comment.

Baher Azmy, a lawyer for the Iraqi plaintiffs with the Center for Constitutional Rights, described the ruling as a significant jurisdictional decision that would provide the Iraqis with their day in court.

The Justice Department had filed an amicus brief in the appeal, arguing that the Iraqis should be allowed to sue the contractors for damages.

The case is Al Shimari et al v. CACI International Inc et al, U.S. Court of Appeals for the 4th Circuit, No. 09-1335.

(Reporting By Terry Baynes; editing by M.D. Golan)