Baker Hughes suspended its Iraq operations in the aftermath of the incident and declared a force majeure to its clients because of a "significant disruption of business."
In a statement reported by MENA, Shaddad added orders were given to deport him. His documents were sent to al-Zubbari Court.
Hundreds of angry Iraqi protesters besieged on Monday Schlumberger, a British oil services firm, and called for closing it in protest against a similar incident when a British national teared down the same flag.
The incident took place at the Rumaila oilfield in south Iraq, where Britain's BP and China's CNPC have been working with oil services companies to ramp up output, AFP reported.
"This provoked a group of workers, and they went and hit him repeatedly," said Shaddad in the statement quoted by AFP.
"He was transferred to Al-Fayhaa hospital in Basra, and he is now in the custody of Iraqi forces."
Shaddad said there were demands for Schlumberger's offices in Basra to be closed and its foreign staff deported.
The two incidents come amid commemorations marking the death of Imam Hussein in 680 AD at the hands of the armies of the caliph Yazid, which has over time come to mark the symbolic split between Islam's Sunni and Shia sects.
To mark the occasion, millions of Shias converge on the Iraqi city of Karbala, which houses a shrine to Imam Hussein.