Kim Dotcom can technically be extradited to the United States over copyright allegations - but his case has stalled after New Zealand's top court says more legal arguments are required.
The Supreme Court ruling, delivered this morning by Chief Justice Helen Winkelmann in Wellington, said the Court of Appeal erred in its finding that judicial review proceedings by the internet entrepreneur and three others were an abuse of process.
It said these arguments must be allowed before a final decision is made.
However, unless the group are successful at a new hearing, they will be eligible for extradition for alleged copyright offences, but not over a charge of conspiracy to commit money laundering, which the Supreme Court said had "no available extradition pathway".
Dotcom's New Zealand lawyer, Ron Mansfield, described the judgment as a "mixed bag" for his German-born client and family.
"There is no final determination that he is to go to the United States."
Mansfield said the court had accepted that there were "serious procedural issues" in the case that should be heard.
"This means there will be further argument in the Court of Appeal and/or the Supreme Court regarding these significant concerns that are well established in the evidence.
"This is significant and means that nothing further can happen until the further required hearings take place. Kim stays here, at home, with his family.
"We welcome the opportunity to take the United States to task on its prosecution and management of this request for extradition. This has been a political case and the United States have sought to thwart Mr Dotcom running any meaningful factual defence to it."
Mansfield said the court's rejection of Megaupload's claim it had the same "safe harbour" provisions that protect internet service providers and its other copyright findings would have "an immediate and chilling impact on the internet".
"It will be interesting to see how the challenges now faced by internet service providers are responded to. Can they live with it? Will it result in access restrictions and further costs that we will all incur as a result? Or will our Government be lobbied to intervene and provide real and workable protections for them?
"With Covid-19 upon us, access to the Internet is now essential to our business community, more so than it has ever been in the past."
Dotcom's US lawyer Ira Rothken also tweeted: "Our legal team looks forward to pointing out that the government's misconduct should lead to a denial of extradition."
The mammoth courtroom fight - costing millions of dollars - has spanned nearly a decade since Dotcom's dramatic arrest during an FBI-ordered raid on his former Coatesville mansion north of Auckland in 2012.
A US grand jury indicted Dotcom, computer programmers Mathias Ortmann and Bram van der Kolk, and marketing manager Finn Batato on February 6, 2012, over the now-defunct file-sharing website Megaupload, which allegedly shared pirated films and other media.
It has been called the "Mega conspiracy" after several companies allegedly facilitated, encouraged and profited from significant mass infringement of copyright.
The US has sought the men's extradition and the group have fought it ever since.
The appeal by the group to the Supreme Court was heard in June last year, before the court announced its decision from 11am today.
It came after failed appeals to the High Court and Court of Appeal in 2018.
The initial issue for the Supreme Court was to consider whether there was double criminality - meaning would the allegations contained in the US charges also be criminal offences in New Zealand.
But the court found there to be no matching offence for count 3, an allegation of conspiracy to commit money laundering, and it discharged the group on that count.
However, the 12 other charges the group can be extradited for include, racketeering conspiracy, conspiring to commit copyright infringement, five charges of wilful copyright infringement including by distributing a pre-release copy of the movie Taken, and five wire fraud counts.
The alleged copyright abuse was said to have cost movie and music producers US$500m.
Dotcom and the group had also applied for judicial review of the North Shore District Court decision, which first found them eligible for extradition to the US in 2015.
But the bid for judicial review was dismissed by the High Court and later Court of Appeal, which found the proceedings to be an abuse of process.
The Supreme Court today said the Court of Appeal was wrong in its finding.
It allowed the group's appeal and said the Court of Appeal should have engaged with the grounds raised in the judicial review applications to determine whether they were truly duplicative of grounds raised in the extradition appeals.
Those grounds which did not overlap needed to be addressed, the top court said in its 194-page judgment.
It directed the parties to file submissions by mid-December to identifying the issues which remain outstanding in the judicial review proceedings and outline their view about what court should resolve them.
Therefore, a final ruling by the courts about whether the group are eligible for extradition will be made after the judicial review appeals are determined.
Dates for any future hearing are yet to be set.
Ultimately, if the group is unsuccessful, the Justice Minister will then decide whether to sign off the group's extradition.
The decision, which may rest with current minister Kris Faafoi, could also be subject to a request for a High Court judicial review and could go on to prompt further appeals.
Today's decision also fell just hours before the world learns who will win the US presidency.
Dotcom tweeted about the impending decision last week: "Will New Zealand sell its soul and ignore its own laws which are supposed to protect me or will New Zealand right the terrible wrong that was done? We find out on US Election Day, the date chosen by the Supreme Court to ensure minimal international news coverage of this decision."
He has accused government agencies of previously being "in cahoots" with former US Vice President Joe Biden to take down Megaupload.
Former US Secretary of State Hillary Clinton's signature was on the extradition request.
During the raid on Dotcom's mansion in 2012, police used the anti-terrorist Special Tactics Group in a helicopter assault - which was captured on video and resembled a scene from a Hollywood action film.
Will New Zealand sell its soul and ignore its own laws which are supposed to protect me or will New Zealand right the terrible wrong that was done? We find out on US Election Day, the date chosen by the Supreme Court to ensure minimal international news coverage of this decision. https://t.co/Mah4TvGC7e
— Kim Dotcom (@KimDotcom) October 30, 2020
The FBI alleged the men ran Megaupload, founded in 2005, to profit from pirated movies and music downloaded by users from the site.
Megaupload, which Dotcom has said was a legal business worth $2 billion, was taken down in 2012 on the same day the group was arrested.
Dotcom and his co-accused have argued Megaupload was simply a service offering cloud storage to users - covered by the "safe harbour" protections that protect internet service providers from any legal repercussions related to material trafficked by users.
The lengthy legal saga also saw the initial search warrant was challenged in court, which led to the discovery of unlawful spying on Dotcom by the Government Communications Security Bureau in 2013.
In 2017, police were also believed to have paid Dotcom a six-figure sum in a private settlement over alleged unreasonable force.
In 2018, Dotcom also tried and failed to have former US President Barack Obama served with a subpoena to force him to give evidence in the High Court over a damages claim for Megaupload.
Obama was in New Zealand for three days at the time.
Dotcom argued that Obama could give evidence directly material to his proceeding, the purpose of the US prosecution against him and its dealings with New Zealand authorities.
Dotcom, who delved into politics in 2014 when he formed the Internet Party, has previously said a "global legal team" of 20 lawyers from New Zealand, United States, Canada, Hong Kong and Germany has worked on his case.
More than $40 million in legal fees has also been spent, he said in a tweet.
For the taxpayer at least $10m has reportedly been spent on legal fees and costs.
Born as Kim Schmitz and a German citizen, Dotcom made his name as an internet entrepreneur in the 1990s and has been involved in a myriad of legal proceedings around the world.
He was granted New Zealand residency in 2010 and now lives in Queenstown.
