(Adds Amnesty comment paragraphs 11-12)
BERLIN, Nov 2 (Reuters) - Germany's highest appeals court on Thursday rejected a claim by a group of Serbs for compensation from Germany for NATO air strikes in 1999 which killed 10 Serbian villagers and injured 30.
The court said German law made no provision for compensation between a state and individual people, only between states, and noted that German aircraft did not take part in the attack.
"There is no breach of conduct by German soldiers or authorities because German planes were not directly involved in the attack," the court said in a statement.
The attack took place on May 30, 1999 in the village of Varvarin in central Serbia. NATO bombers struck a bridge over the river Morava while local people were celebrating an Orthodox Christian holiday.
Most of the dead were killed in a second strike a few minutes later while they were trying to give first aid to victims of the initial attack.
In 1999, NATO operations drove Serb forces out of Kosovo, a Serbian province with a mostly ethnic Albanian population.
The 35 Serbs who brought the case against NATO member Germany and claimed between them about 530,000 euros ($675,000) argued that Germany could have used its veto on NATO attacks on what was a civilian target with no military significance.
Unable to take action against NATO as a whole, they brought the case against Germany mainly because it was where they found financial backing, a campaigner said.
"This is a case against Germany in the sense that it is a member of NATO. We wanted to bring a case in the United States but could not find the money to do so," Gordana Milanovic of the NATO-War Victims Claim Compensation Project told Reuters.
She said interest in Germany was aroused by a report by human rights group Amnesty International which in 2000 criticised NATO for failing to suspend the attack on the Varvarin bridge after it was evident they had hit civilians.
Amnesty said the court's decision showed contempt for the development of international law.
"Contrary to the court's argument, individuals -- not only states -- are entitled to compensation in cases of war crimes and crimes against humanity," said Amnesty International international law expert Nils Geissler.
A plaintiffs' lawyer told Reuters it was unclear whether the group of Serbs would take further action.
"We do not exclude the possibility that we will take this further -- it would go next to the Constitutional Court -- but it is too early to say yet," lawyer Joachim Kummer told Reuters.
Lower courts in Bonn and Cologne rejected the suit.