Jerusalem----July 27......A $250 million federal lawsuit filed against the Palestinian Liberation Organization by relatives of a Jewish settler couple killed in a 1996 terrorist attack will proceed in Rhode Island, a federal judge has ruled.

In a 47-page ruling issued Tuesday, US District Court Judge Ronald R. Lagueux said the case against the PLO and the Palestinian Authority could proceed under the federal Anti-Terrorism Act of 1991.

"We're very pleased," Providence attorney David J. Strachman, who is representing the victims' relatives, said yesterday. "It's a very well reasoned, well thought out, detailed decision."

A phone message left at the PLO office in Washington, D.C., was not immediately returned. A PLO attorney in New York did not immediately respond yesterday to a fax requesting an interview.

The lawsuit claims Palestinian officials were responsible for the drive-by shooting of Yaron and Efrat Ungar because they allowed Hamas, a militant Palestinian group, to operate training facilities in the West Bank and Gaza Strip and encouraged terrorism in the region.

Lagueux ruled the case could proceed against the Palestinian Authority and the PLO because those organizations conduct a substantial amount of activity in the United States and the PLO has an office in the nation's capital.

Yasser Arafat, other Palestinian leaders and Hamas members also were named as defendants in the lawsuit. But Lagueux dismissed the case against the individual Palestinian leaders.

The Ungar family filed the suit in Providence because Strachman is the executor for the couple's estate.

The Ungars, in their 20s, were near Beit Shemesh, Israel, near the West Bank, when gunmen sprayed their car with bullets.

Their then 9-month-old son, strapped in a baby seat in the back of the car, survived the machine-gun attack unharmed.

The couple is also survived by another son, who was 2 when they died.

Four members of Hamas were convicted in the case and jailed by the Israelis. A fifth remains at large, according to court documents.

The lawsuit is based on a law Congress enacted after victims of the 1985 Achille Lauro hijacking struggled to make claims against the PLO. The statute gives federal courts jurisdiction over such cases, making it easier for US victims of terrorism overseas to collect damages.

Lagueux ruled the case could proceed because Yaron Ungar was a native of New York. However, the claim seeking damages on behalf of his wife's death was dismissed, because Efrat Ungar was not a citizen of the United States.

The defendants sought to have the case dismissed based on several arguments. Lagueux agreed to dismiss state charges connected to the crime, saying the acts occurred in Israel and should be filed under Israeli law.

The relatives have 30 days to refile those charges under Israeli legal guidelines.

ISRAEL NEWS AGENCY