From what I understand the law has changed and now certain types of contractors, like Blackwater employees, fall under the local legal jurisdiction. However, I can't believe it's grandfathered in, so these guys are not subject to Iraqi law.
The point is no US military veteran with a brain would have gone from say, the Special Forces, to Blackwater in Iraq, if he was going to fall under Iraqi law. You'd be crazy to place yourself in that kind of jeopardy.