A US judge has ruled that Sudan is partly responsible for the suicide bombing of the USS Cole warship that killed 17 US marines in 2000.
The victims' families are suing the Sudanese government, accusing it of aiding terrorism.
They say al-Qaeda, which was blamed for the attack, could not have carried it out without Sudan's support.
Sudan had tried to have the case dismissed, saying too much time had passed since the 2000 bombing.
"The judge... found the evidence involving Sudan's responsibility for the bombing of the Cole to be sufficient and in point actually overwhelming," Andrew Hall, the leading lawyer for the victims' families, told the AFP news agency.
The families are seeking more than $100m in compensation through a Virginia court.
Funds frozen
Although Sudan is deemed liable to pay damages, the judge has yet to say how much they should come to.
Mr Hall says it will be up to the lawyers to collect damages from Sudan's assets that have been frozen in the US.
Seventeen US sailors died and 39 more were injured in the attack off Yemen.
The families say the Sudanese government gave al-Qaeda and its leader, Osama Bin Laden, financial and technical support.
This, they say, allowed the group to establish training bases, run businesses and even use Sudanese diplomatic passports to carry explosives.
The Sudanese government insists there is no link between it and al-Qaeda - a view backed by one recent US government report.
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