Updated

The security firm formerly known as Blackwater told a federal judge Thursday that the U.S. government — and not the company — should be held accountable for a 2007 shooting by its contractors that killed 17 Iraqis.

The Moyock, N.C.-based company and several of its contractors are seeking the dismissal of a lawsuit that was filed on behalf of three people killed in the shooting — Ali Kinani, Abrahem Abed Al Mafraje and Mahde Sahab Naser Shamake. It accuses the parties of wrongful death and negligence, and seeks punitive damages.

Lawyers for the company, now known as Xe Services, argued in court that Blackwater contractors were essentially acting as employees of the U.S. government because they were providing security to State Department personnel.

Unlike duties performed by other contractors, the sensitive nature of providing security in a war zone required the kind of oversight the government normally reserves for its own employees, attorney Andrew Pincus argued.

"This isn't food service, where we can sort of leave it to the chefs," he said.

Lawyers for both the plaintiffs and the government disputed that, and said the practical effect of transferring the focus of the lawsuit to the federal government would be its dismissal. The federal government is exempt from such lawsuits.

Judge Terrence W. Boyle didn't immediately rule on the motions in the case, but said the most important issue seems to be whether the government is ultimately responsible for the actions of its contractors.

"If the government can cut the cord and let that drift off into space, that's one world," he said. "But it's a different world if the government has to be held accountable."

In separate motions, lawyers for Blackwater and the contractors argued they can't be sued by foreigners for something that happened in a foreign country governed by foreign law. They also argue that Iraqi law prohibits such lawsuits.

The contractors contend insurgents ambushed them in a traffic circle before they opened fire, but prosecutors say the men unleashed an unprovoked attack on civilians using machine guns and grenades.

The five contractors were initially charged with manslaughter for their role in the 2007 Nisoor Square shooting, which strained relations between Baghdad and Washington. A year ago, a federal judge dismissed those charges, citing missteps by the government.

A sixth contractor, Jeremy Ridgeway, pleaded guilty in the criminal case. He filed a separate defense in the civil lawsuit, arguing that the federal court in North Carolina has no jurisdiction to hear the case.

Blackwater changed its name to Xe Services in March, saying its brand had been tarnished by its work in Iraq. The company settled a separate series of federal lawsuits earlier this year connected to the Nisoor Square shooting and others in Iraq.

The company is now looking for new ownership.

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Associated Press Writer Mike Baker contributed to this report.