BAGHDAD, April 5 (Reuters) - The U.S. military held a pre-trial hearing on Tuesday for an interpreter accused of a stabbing in Iraq, the first attempt to apply military law to civilian contractors working for U.S. forces in Iraq.

Alaa Mohammad Ali, who holds Iraqi and Canadian citizenship, has been charged with aggravated assault, accused of stabbing another interpreter while working for U.S. forces at a combat outpost in the western Iraqi town of Hit.

His pre-trial hearing took place in a courtroom at a U.S. base in Baghdad with witnesses who were unable to be present testifying by video link, the military said in a statement.

Ali is the first contractor charged under an amendment passed by Congress in 2006 which authorises military trials for contractors accompanying U.S. troops. He has been held by U.S. military authorities since February.

The U.S. military says he will be given the same rights as a U.S. service member facing military court.

The legal status of contractors in Iraq has been the subject of substantial controversy, especially since last September when contractors from the U.S. firm Blackwater were accused of wrongly killing 17 people in a shooting in Baghdad.

The FBI is investigating whether Blackwater employees broke any laws in that incident, which the Iraqi government has described as a "massacre". Blackwater says its employees believed they were in danger.

The Blackwater staff were employed by the U.S. State Department to guard embassy officials and it is not clear if they could be prosecuted under laws covering contractors accompanying the military, or other U.S. laws.

The State Department announced earlier this month it was extending Blackwater's contract for another year. Iraqi Prime Minister Nuri al-Maliki complained that Iraq was not consulted before the contract was extended. (Reporting by Peter Graff, editing by Mary Gabriel)

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