Hearing begins with finger-pointing

Preliminary discussions in the Kim Dotcom extradition hearing have been dominated by finger-pointing from both sides.

The long-awaited hearing followed FBI charges laid in January 2012 when the internet entrepreneur and three others - Mathias Ortmann, Bram van der Kolk and Finn Batato - were arrested on charges of criminal copyright violation.

Though the Auckland District Court case began yesterday morning, the purpose of the sitting was to structure the next four weeks, with the extradition hearing proper to begin on Thursday.

Christine Gordon, QC, on behalf of the US Government, said starting with the extradition eligibility hearing before hearing three different applications for a stay of proceedings was the "practical and rational" way forward.

But lawyers for the four respondents argued the stay applications should be heard, and ruled upon, first.

Dotcom's lawyer Ron Mansfield said even before that the key issue for Judge Nevin Dawson to decide was whether the defendant had breached New Zealand law.

He said Megaupload was effectively an internet service provider and as such, under the Copyright Act, was protected from prosecution.

It was the first time the issue had been raised in reference to Dotcom's case.

Mr Mansfield expected the Crown - on behalf of the US Government - to forward a "competing interpretation" of the law but he said if the court saw it from Dotcom's point of view it would put the kibosh on extradition proceedings.

Ms Gordon was critical of the stay applications filed by defence counsel, one of which she said contained "wide-ranging allegations against various New Zealand agencies and government departments revealing an alleged abuse of process warranting a stay of the extradition proceedings".

She called them "mostly speculative and lacking an air of reality".

The application also contained a suggestion the US directed the New Zealand Government to give Dotcom permanent residency so they knew where he was.

"All supposition and drawing of links without basis," Ms Gordon said.

Judge Dawson will now decide the order of proceedings to begin on Thursday.