It is doubtful that foreign security contractors could be prosecuted under Iraqi law. A directive issued by U.S. occupation authorities in 2004 granted contractors, U.S. troops and many other foreign officials immunity from prosecution under Iraqi law.
Security contractors are also not subject to U.S. military law under which U.S. troops face prosecution for killing or abusing Iraqis.
I bring it up because I think it speaks to a larger issue, including the warrantless spying issue.
Put simply, when there are no constraints on behavior then humans do bad things almost as a matter of course. The contractors in Iraq are working without any enforcment of rules of engagement. It was inevitable that an event like the one documented in this story would eventually take place.
But the same thing is true in regards to the NSA and the data-mining eavesdropping programs. They may have been set up with the best of intentions, but without oversight or coherent rules, abuse is inevitable.