US viceroy Paul Bremmer is to issue an order defining the status of foreign troops and workers in Iraq before 30 June, according to a senior official quoted by Reuters.
But the multi-billion dollar question is whether Bremer's decree will spell out the legal status of so-called private contractors.
State and corporate secrecy protects more than 35 private security firms connected to the US and UK political establishments from accountability for their conduct.
Yet these same military companies provide more support to the US-led occupation than the British army, with estimates putting their combined strength in excess of 20,000 individuals.
Whether it is guarding pipelines, protecting US officials or even driving tanks - Iraq's continued occupation relies heavily on the private sector.
Contracting military work to modern-day mercenary companies directed by prominent politicians, statesmen and security officials has become big business.
David Claridge, a director of a London security firm, has estimated that Iraq contracts have boosted the annual revenue of British-based security firms alone from $320 million to more than $1.7 billion.
With an absence of guidelines, accountability goes largely unregulated. It has become clear that some legal loopholes are so big that scandals such as at Abu Ghraib prison abuses can slip through.
Private contractors in Iraq have signed agreements that provide them with immunity from prosecution under Iraqi law.
So Iraqi families without huge amounts of money will have little recourse to the rule of law should they suffer at the hands of thousands of heavily-armed but unregulated mercenaries.
Speaking to Aljazeera.net on Tuesday, Human Rights Watch (HRW) spelled out the legal theory.
"The state with authority over the military contractor remains responsible under international law for the contractor's actions," says HRW's Middle East director, Joe Stork.
But mercenaries cannot be prosecuted under US military law except during declared war, according to the US military field manual.
of contractor employees is the responsibility
of the contractor's management structure, not the military chain
US military field manual
The manual adds: "Maintaining discipline of contractor employees is the responsibility of the contractor's management structure, not the military chain of command."
Military contractors who are US nationals could be prosecuted by a US federal court under the War Crimes Act of 1996, but not so the numerous British, South African and one Israeli firm currently in Iraq.
Additionally, contractors working for the US Department of Defence could technically be prosecuted under the toothless Military Extraterritorial Jurisdiction Act of 2000, known as MEJA.
MEJA was enacted in 2000 primarily to protect US soldiers and their dependents on US bases abroad, who became victims of crimes committed by military contractors with effective immunity from prosecution.
But MEJA remains untested because the Defence Department has yet to issue the regulations necessary to implement it.
The need for regulation has become clear. The British/South African company Erinys, which won a $100 million-plus annual contract to provide security at Iraq's oil facilities and pipelines, appears to employ people with worrying backgrounds.
South African employee Francois Strydom, killed last January, had fought for the Koevoet pro-apartheid paramilitary in Namibia - according to Johannesburg's Mail and Guardian newspaper.
Another employee, Deon Gouws, was a former member of the South African secret police, Vlakplaas, and was charged by the South African Truth Commission for murdering an anti-apartheid activist in 1986.
Only regular soldiers have been
questioned over Ghraib abuse
A former South African judge, Richard Goldstein, has gone on the record as saying he knew of 150 former apartheid-era security operatives working as mercenaries in Iraq.
And to date, only regular US and UK soldiers have been brought to book for the Abu Ghraib scandal.
Friends in high places?
It may be that the former diplomats who run these private military companies, and thus supplement their countries' troop deployments, are also able to protect themselves from prosecution.
Former US president George Bush's Carlyle group is about as well connected to the political establishment as it is possible to be.
Its subsidiary, Diligence, was founded by a former CIA director – William Webster.
It is now owned by a former US ambassador, Richard Burt. Its deputy chairman, Joe Allbaugh, was the current president's campaign manager in 2000.
Allbaugh has also founded another security firm, New Bridge Strategies, and signed a contract with Diligence.
Similarly, the numerous British firms are equally well connected. ArmorGroup is directed by former British foreign secretary Sir Malcolm Rifkind.