The U.S. Court of Appeals here ruled yesterday that Antarctica is not a foreign country, at least when it comes to suing the U.S. government.

The decision, by a three-judge panel, keeps alive a lawsuit by families of the victims of the crash of an Air New Zealand DC10 on Nov. 28, 1979, in Antarctica.

All 257 persons aboard were killed when the plane slammed into Mount Erebus, a 12,450-foot active volcano, during a sightseeing trip.

The plaintiffs filed suit in U.S. district court in 1983, alleging negligence by U.S. Navy air traffic controllers at McMurdo Naval Air Station. Lawyers for the government asked that the case be thrown out, claiming the United States cannot be sued for "any claim arising in a foreign country."

"Antarctica can properly be characterized as something of an international anomaly," said the ruling, written by Judge Malcolm R. Wilkey. "It is a large continent which has never been and is not now subject to the sovereignty of any nation."

Claims that arise in foreign countries normally are disallowed because they would subject the United States to the laws of foreign nations, the court said. "As we have seen, this is a situation directly opposite to the fear of becoming entangled in foreign law . . . . "

The court said it rejected the government's legal argument that "there are two areas of the world only -- first, the United States, and second, foreign countries. There are obviously several other areas in which people operate, e.g., outer space, the high seas and Antarctica.

"While the other non-United States/non-foreign country areas may be covered by some law, we have a no man's land of law in Antarctica, unless United States law covers the actions of United States citizens -- not an unfair concept . . . .

"Unless this concept is accepted," the court added, "Antarctica is an area without any law whatsoever."

Judge Patricia M. Wald joined in the decision. A dissent by Judge Antonin Scalia is to be filed later.