Following a 2007 shooting incident involving a group of Blackwater personnel and civilians in Baghdad, several lawsuits were filed. They included criminal charges filed by the US Department of Justice against the security guards, as well as civil claims filed by a survivor and the estates of three victims of the attack in US court. The civil lawsuit ended in an out of court settlement by the parent corporation of Blackwater. Several of the security guards involved were convicted in the criminal case filed by the US government, but have appealed their conviction. 

On 16 September 2007, a group of Blackwater personnel providing security for a US State Department convoy in Baghdad were involved in a shooting incident in which shots were fired at civilians.  As many as 17 Iraqis were killed, and over 10 injured.  On 11 October 2007, a survivor and the estates of three victims of the attack filed a lawsuit under the Alien Tort Claims Act in US federal court against Blackwater, its parent company The Prince Group, and Blackwater founder and chairman Erik Prince.  The plaintiffs claim that Blackwater is liable for extrajudicial killings and war crimes because its employees opened fire on unarmed civilians.  The plaintiffs’ claims also include wrongful death and negligent hiring, training and supervision by Blackwater of its personnel.  In an interview, Erik Prince said the lawsuit was “politically motivated” and without basis.  In July 2009, the court consolidated this case with five other lawsuits based on similar facts.  On 6 January 2010, parties to five of the consolidated lawsuits announced that they had reached a settlement with the defendants, while the suit filed on behalf of the three victims of the 2007 incident continued.  In December 2010, Blackwater argued that the US government, and not the company itself, should be held accountable for the shooting incident because it was providing security to State Department personnel.  In January 2011, District Judge Terrence Boyle ruled that nonresidents are unable to sue in federal court for injuries sustained outside the country and sent the case back to a North Carolina court, where the suit was first filed.  The company, now known as Academi, settled this lawsuit out of court in January 2012.  The terms of the settlement are confidential.

On 8 December 2008, the US Department of Justice filed criminal charges against five individual Blackwater security guards with regard to the same incident.  The Department of Justice did not file charges against the company.  The defendants were charged with 14 counts of voluntary manslaughter and 20 counts of attempted manslaughter.  A sixth guard pleaded guilty to lesser charges in return for cooperating with the government.  On 31 December 2009, the judge in this case dismissed the lawsuit. The judge stated that the Department of Justice's mishandling of the case required the indictments to be dismissed.  The Justice Department appealed the decision and on 22 April 2011 a three judge panel at the federal court of appeal reversed the lower court’s decision, sending the case back for further hearings.  On 6 June 2011, the defendants filed a petition asking the full court of appeal to review the panel’s decision.  On 19 July 2011, the court of appeal unanimously rejected defendants’ request. The Blackwater guards petitioned the U.S. Supreme Court on 21 October 2011, but on 4 June 2012 the Court declined to hear the appeal.

On 17 October 2013 the US Deptartment of Justice filed new charges against four of the individual Blackwater security guards charging them with voluntary manslaughter and other crimes.  On 22 October 2014, a jury found the four guards guilty of murder and manslaughter.  The jurors rejected the guards' claims that they had acted in self-defence.  On 13 April 2014, the guards were each sentenced to lengthy prison terms.

On 1 February 2016, the four guards appealed their convictions on the grounds that a key witness for the prosecution changed his testimony, and that the prosecutors lacked jurisdiction to bring the case under the Military Extraterritorial Jurisdiction Act, as the guards were acting under the State Department authority, not military. 

On 17 January, two former Blackwater Security guards appealed their sentences, arguing a witness lied during their trial.

In December 2020, the President of the United States Donald Trump pardoned four security guards who were serving jail sentences for killing 14 civilians including two children in the 2007 Baghdad massacre.

- "Ex-Blackwater Guards Given Long Terms for Killing Iraqis", Matt Apuzzo, New York Times, 13 Apr 2015

- "Four Blackwater guards found guilty in 2007 Iraq shootings of 31 unarmed civilians", Spencer S. Hsu, Washington Post, 22 Oct 2014
- "New charges brought against former Blackwater guards in Baghdad shooting", Sari Horwitz, Washington Post, 17 Oct 2013
- "Supreme Court rejects Blackwater Iraq shooting appeal", James Vicini, Reuters, 4 Jun 2012
- "Blackwater successor settles Baghdad shooting suit", AP, 7 Jan 2012
- "Blackwater Guards Pitch Manslaughter Case to U.S. Supreme Court", Mike Scarcella, Blog of the Legal Times, 24 Oct 2011
- "D.C. Circuit Refuses to Rehear Blackwater Manslaughter Case", Mike Scarcella, Blog of the Legal Times, 19 Jul 2011
- "Former Blackwater Guards Challenge Appeals Court Ruling", Mike Scarcella, Blog of the Legal Times, 6 Jun 2011
- "Appeals court revives Blackwater case", Nedra Pickler, AP, 22 Apr 2011
- "Judge returns Iraq shooting suit to NC court", Mike Baker, AP, 27 Jan 2011
- "Blackwater on Nisour Square Killings: 'US at Fault'", Al Jazeera English, 17 Dec 2010
- "Blackwater settles series of civil lawsuits", Mike Baker, AP, 7 Jan 2010
- "Charges Against Blackwater Guards Dismissed in Iraq Killings", Charlie Savage, New York Times, 31 Dec 2009
- “Blackwater Shootings of Iraqis Unprovoked, Say Prosecutors”, Lara Jakes Jordan & Matt Apuzzo, Associated Press, 9 Dec 2008
- “Blackwater Chairman Defends His Guards Against Allegations of Unprovoked Attack on Iraqis”, Sean Maroney, Voice of America, 14 Oct 2007
- “Family Members of Slain Iraqis Sue Blackwater USA for Deadly Baghdad Shooting”, Democracy Now, 11 Oct 2007

- “Iraqi Report Says Blackwater Guards Fired First”, Sabrina Tavernise & James Glanz, New York Times, 18 Sep 2007

- “Blackwater Denies Any Wrongdoing in Shooting Incident”, Ken Fireman & Robin Stringer, Bloomberg, 17 Sep 2007

- US Department of Justice: Five Blackwater Employees Indicted on Manslaughter and Weapons Charges for Fatal Nisur Square Shooting in Iraq, 8 Dec 2008

- Center for Constitutional Rights [plaintiffs' co-counsel]:
     - Blackwater USA Sued for Firing on Iraqi Civilians, According to Legal Team for Injured Survivor and Families of Three Killed, 11 Oct 2007
     - Abtan, et al. v. Blackwater Lodge and Training Center, Inc., et al. - Case synopsis [includes links to legal documents]
     - Albazzaz & Aziz v. Blackwater Lodge and Training Center, et al. - Case synopsis [includes links to legal documents]

- [PDF] In re: Blackwater Alien Tort Claims Act Litigation - Consolidated Memorandum of Law in Support of Defendants' Motions to Dismiss, 24 Jul 2009
- [PDF] Estate of Atban, et al. v. Xe/Blackwater, et al. - First Amended Complaint, 1 Jul 2009
- [PDF] Estate of Himoud Saed Atban, et al. v. Blackwater USA, et al. in the U.S. District Court for the District of Columbia - Defendant's Motion to Dismiss, 22 Jan 2008
- [PDF] Estate of Himoud Saed Atban, et al. v. Blackwater USA, et al. in the U.S. District Court for the District of Columbia - Amended Complaint, 26 Nov 2007

- [PDF] Estate of Himoud Saed Atban, et al. v. Blackwater USA, et al. in the U.S. District Court for the District of Columbia - Complaint, 11 Oct 2007