A US human rights group says it is suing private security firm Blackwater for unspecified damages for war crimes and wrongfully killing Iraqi civilians.
Blackwater provides security to US diplomatic staff in Baghdad
The Center for Constitutional Rights is acting on behalf of an injured survivor and three families of men killed by Blackwater guards on 16 September.
The Iraqi government said the incident in which 17 people died was unprovoked. Blackwater denies firing without cause.
The case has put a spotlight on private military contractors in Iraq.
The action claims Blackwater "created and fostered a culture of lawlessness amongst its employees, encouraging them to act in the company's financial interests at the expense of innocent human life," the centre said in a statement.
BLACKWATER USA FACTS
Founded in 1997 by a former US Navy Seal
Headquarters in North Carolina
One of at least 28 private security companies in Iraq
Employs 744 US citizens, 231 third-country nationals, and 12 Iraqis to protect US state department in Iraq
Provided protection for former CPA head Paul Bremer
Four employees killed in Falluja in March 2004
It has been filed in Washington on behalf of Talib Mutlaq Deewan and the estates of Himoud Saed Atban, Usama Fadhil Abbass, and Oday Ismail Ibraheem, the group said.
"This senseless slaughter was only the latest incident in a lengthy pattern of egregious misconduct by Blackwater in Iraq," said lawyer Susan Burke. The group say its complaint alleges Blackwater is liable for claims of assault and battery, wrongful death, emotional distress and negligence.
Blackwater has the contract for guarding US embassy staff in Baghdad and is also used both by visiting businesspeople and officials.
It insists its staff were acting in legitimate self-defence, and that they had been fired on by insurgents first.
Separately, the UN has called for private security contractors in Iraq to face prosecution if they are accused of serious crimes.
The UN's human rights official in Iraq, Ivana Vuco, said private guards were subject to international law, despite being given immunity by a US directive following the US-led invasion of Iraq in 2003.
"For us, it's a human rights issue," said Ms Vuco. "We will monitor the allegations of killings by security contractors and look into whether or not crimes against humanity and war crimes have been committed."
Iraqi ministers say they are determined to press ahead with legislation that would strip foreign security personnel in Iraq of this protection.
The behaviour of private security companies in Iraq was further highlighted on Tuesday with the killing of two Baghdad women by security guards from an Australian-run firm.