A $10 billion lawsuit that Mexico's government filed against American gun makers whose weapons it says are used by drug cartels can go ahead, a U.S. appeals court ruled Monday.

Why it matters: The first-of-its kind case that's likely to be appealed comes as Mexican officials demand American authorities urgently investigate why cartels have U.S. Army weapons that are not available to U.S. citizens.

• It's estimated that up to half a million weapons are smuggled every year from the U.S. to Mexico, which has seen spiking gun violence despite strict regulations. There were more than 30,000 homicides in Mexico last year.

Of note: The U.S. Court of Appeals for the First Circuit in Boston's decision means it's "the first court to uphold the right of a sovereign country to sue the gun industry," per a statement from Global Action on Gun Violence, which is involved in the case.

• It's also "the first federal appeals court to allow gun manufacturers to be held liable for facilitating gun violence since a U.S. gun industry protection law was enacted in 2005," the nonprofit added.

State of play: The suit, first filed against six gun manufacturers including Smith & Wesson and Glock in 2021, alleged the makers' loose controls allowed for the weapons to be illegally trafficked into Mexico and noted that U.S.-made guns were more likely to be used to kill Mexican citizens than Americans.

• An October 2022 ruling found that U.S. law under the Protection of Lawful Commerce in Arms Act protects gun makers, who deny any wrongdoing, from being sued.
• Mexico's government argued in its appeal of that dismissal that the PLCAA does not provide immunity for harm caused abroad, or where gun companies violate the law.

Driving the news: U.S. Circuit Judge William Kayatta wrote in the three-judge panel's decision Monday that the Mexican government "plausibly alleges a type of claim that is statutorily exempt from the PLCAA's general prohibition."

• The judges found "that the complaint adequately alleges that defendants aided and abetted the knowingly unlawful downstream trafficking of their guns into Mexico," according to Kayatta.

What they're saying: "Today's ruling is a huge step forward in holding the gun industry accountable for its contribution to gun violence, and in stopping the flood of trafficked guns to the cartels," said Global Action on Gun Violence's president Jonathan Lowy, who is co-counsel for Mexico's government in the case.

• "Not only did the Court recognize the right of another country to sue U.S. gun companies, it also pierced the unfair legal shield that gun companies have been hiding behind since 2005."

The other side: Larry Keane, from the National Shooting Sports Foundation, the gun industry's main trade association, said the group disagreed with the decision and was reviewing its legal options.

• "Mexico should spend its time enforcing its own laws & bring Mexican criminals to justice in Mexican courtrooms, instead of scapegoating the firearm industry for their unwillingness to protect Mexican citizens," he added in his statement, which was posted to X.

Editor's note: This article has been updated with new details throughout.