Judge halts Blackwater arbitration

In yet another twist to a long-running lawsuit against Blackwater Security Consulting, a federal appeals court has halted an arbitration hearing that could have rendered a final decision on the case.

The families of four former employees of the North Carolina-based private security contractor are suing the company. The four men were killed in Fallujah, Iraq, by insurgents in March 2004, and their bodies were mutilated and burned by a mob in scenes captured by news photographers and television crews. Two of the bodies were hanged from a bridge.

The incident triggered a wave of violence across Iraq and eventually led to a major U.S. offensive in Fallujah.

An investigation by The News & Observer that year uncovered documents that said the men were supposed to have armored vehicles, machine guns and more manpower for such missions. They had none of those things, and the families sued Blackwater, saying that the company had contributed to the deaths.

Since then, the case has bounced between state and federal courts as Blackwater filed various appeals and motions, including two previous appeals to the U.S. Court of Appeals for the 4th Circuit, the court that issued the stay on the arbitration Tuesday.

Blackwater failed in those earlier appeals and in an appeal to the U.S. Supreme Court. Earlier this year, it persuaded a federal judge in Eastern North Carolina that the dead men's contracts barred lawsuits and the only avenue for the dispute was arbitration.

The stay means that the families will have a chance to argue to the 4th Circuit that the suit shouldn't be heard in arbitration Nov. 12, and instead should be sent back to a state court in Raleigh.