Washington, D.C. ? A federal judge ruled Tuesday that the manslaughter case against five former Blackwater Worldwide security guards accused of spraying innocent Iraqis with machine-gun fire can continue.

U.S. District Judge Ricardo Urbina denied two motions to dismiss the case against the five men accused in a September 2007 shooting that left 17 Iraqis dead and another 20 wounded in a busy Baghdad intersection.

The five argued that they are not subject to U.S. civilian criminal laws because they were working overseas under a contract with the State Department to help provide security for diplomats. A legal loophole says only contractors who work for or support the Defense Department can be prosecuted in U.S. courts for crimes committed overseas.