Why you should care about the Dotcom proceedings
For over seven years now, the efforts of the United States to extradite Kim Dotcom and three other Megaupload executives have been a burning issue in the media. Yet, for all this publicity, comparatively little light has been shed on the intricate legal issues at stake, which have implications well beyond the current case – not only for the law of extradition but also for copyright law including the liability of Internet Service Providers (ISPs) for copyright infringement.
Over the course of six days in June this year, the Supreme Court heard appeals by the four extradition respondents in what can generically be referred to as the Dotcom proceedings. They have appealed against findings of the District Court, confirmed by the High Court and Court of Appeal, that they are “eligible for surrender” to the United States in order to face trial for charges arising out of alleged criminal copyright infringement by users of websites they operated.
Extradition is a relatively exotic bird in New Zealand. In contrast with Canada, for example, where multiple extradition cases are dealt with by the courts every year, our Extradition Act 1999 has not been greatly tested since its enactment two decades ago. Enter the Dotcom proceedings, in which nearly every aspect of the extradition process has been challenged and is being subject to scrutiny by the higher courts.
It is impossible, in a short article, to detail or do justice to the myriad issues that have arisen in these proceedings. However, below is a brief overview of some of the matters to be determined by the Supreme Court.
What’s the story?
Many readers will recall how the Dotcom proceedings began: a January 2012 dawn raid by heavily armed police on the sprawling Dotcom mansion; with four Megaupload executives being arrested and brought before the court in response to a request by the United States government for their extradition.
Much water has gone under the bridge since then. Two aspects of the case have already been determined by the Supreme Court: the issue of disclosure in extradition proceedings: Dotcom v United States of America  NZSC 24,  1 NZLR 355; and the legality of search warrants executed in the January 2012 raid: Dotcom v Attorney-General  NZSC 199,  1 NZLR 745. However, the pivotal issue, namely whether or not the respondents can be extradited, is not one that has received a great deal of public attention.
The charges against the respondents in the US arise out of their operation of Megaupload and related websites. The United States alleges that the respondents were part of a criminal conspiracy to commit copyright infringement, and that they have unlawfully encouraged and profited from copyright infringement by users of those websites. Although Megaupload was a Hong Kong company, and none of the respondents were based in the US, jurisdiction is claimed by the US primarily on the basis that Megaupload leased space on computer servers located in Virginia.
In very general terms, it is up to the New Zealand courts to decide whether the respondents are “eligible” for extradition. Whether or not they are actually extradited is a decision that would be made by the Minister of Justice if the courts determine that the respondents are so eligible. We note that a similar decision by the minister in relation to an extradition request by China was recently quashed by the Court of Appeal in Kim v Minister of Justice  NZCA 209 – where leave to appeal to the Supreme Court was granted on 20 September 2019:  NZSC 100.
In December 2015, the District Court found that the respondents were eligible to be extradited in relation to all of the charges against them. The High Court found, in a February 2017 judgment (Ortmann & Ors v United States of America  NZHC 189), that the District Court had fundamentally misunderstood its statutory task. However, the High Court confirmed the District Court judgment on the basis that the correct overall outcome had been reached. Last year, the Court of Appeal essentially upheld the High Court’s findings (Ortmann & Ors v United States of America  NZCA 233).
Eligibility for surrender under the Act
Whether the respondents are eligible for surrender is governed by s 24 of the Act. The two key inquiries for the extradition court are:
- Under s 24(2)(c): Whether the offences with which the respondents are charged in the United States are “extradition offences”; that is, offences for which New Zealand allows extradition. “Extradition offence” is defined in s 4 of the Act.
- Under s 24(2)(d): Whether the evidence adduced at the extradition hearing would justify the respondents’ trial in New Zealand if “the conduct constituting the offence” had taken place here.
The meaning of these tests has been debated at every level in the Dotcom proceedings. Each of the District Court, High Court, and Court of Appeal has applied a different interpretation of the legal tests.
The Court of Appeal agreed with the respondents that the former leading authority on s 24, United States of America v Cullinane  2 NZLR 1 (CA), should be overturned on the basis that it wrongly jettisoned the fundamental principle of double criminality. Double criminality requires that conduct must be criminal in the requested, as well as the requesting, countries before extradition can be ordered. This finding has been challenged by the United States in the Supreme Court.
Section 24(2)(c): Offence categorisation
The primary issue under this provision is whether the conduct underlying the US charges either falls within the scope of an offence described in the relevant extradition treaty (on a Cullinane approach) or makes out a domestic New Zealand offence (if Cullinane remains overruled).
The United States says the alleged conduct in this case corresponds with “conspiracy to defraud”, which is an offence described in the NZ-US Treaty but which was subsequently repealed by way of an amendment to the Crimes Act (so can only be relied on if Cullinane applies). The US also relies on certain other New Zealand offences which are deemed to be described in the Treaty by virtue of s 101B of the Act. Copyright infringement is not included in the NZ-US extradition treaty but s 131 of the Copyright Act 1994 may be deemed to have been described in it, if the requirements of s 101B of the Act are met.
The US charges rely on allegations of copyright infringement by users of the Megaupload websites. The High Court held that the kind of copyright infringement alleged by the US is not criminalised under s 131 of the Copyright Act (although infringement may be challenged in civil proceedings). This was overturned by the Court of Appeal, and argued again before the Supreme Court. The question is whether infringement of copyright by “communication” (essentially online transmission) is criminalised under s 131 and, if so, whether or in what circumstances an ISP can be criminally liable for such infringement by its users.
The US further argues that copyright infringement that is not criminal under the Copyright Act could nevertheless be prosecuted under the Crimes Act. Specifically, the US claims that an ISP whose users infringe copyright could be liable for prosecution under ss 228 (dishonest use of a document), 240 (obtaining or causing loss by deception) or 249 (accessing computer system for dishonest purpose). This is opposed by the respondents, who say these offences do not represent the true criminality being alleged by the US.
Section 24(2)(d): Prima facie case
Section 24(2)(d) is what is known as a “protected provision” under s 11 of the Act, meaning it cannot be altered or overridden by an extradition treaty. It was described by the Supreme Court in the disclosure case ( NZSC 24,  1 NZLR 355) as a fundamental safeguard for requested persons.
Until Cullinane, s 24(2)(d) and its predecessor under the Extradition Act 1965 were always interpreted as applying an ordinary committal test, ie, requiring a requesting state to make out a prima facie case in relation to a New Zealand offence. In the present proceedings, the United States has argued for a different test altogether, saying that evidence is only required of a requested person’s alleged acts and/or omissions (not the circumstances in which those acts or omissions took place, or the results of the acts/omissions). This was accepted by the High Court, which held that matters such as whether a file stored by Megaupload was an infringing copy of a copyright work did not fall within acts or omissions, and so did not need to be inquired into.
Having overturned Cullinane, the Court of Appeal took a different approach. The court accepted that evidence should be measured against ingredients of a domestic offence, but evidence would only be required of ingredients representing the “essential criminality alleged”. The Court of Appeal went on to find that there would be “no point” in requiring the United States to prove any copyright to a prima facie standard, although it suggested in the alternative that copyright may be able to be inferred from the evidence that was provided.
The respondents argue that the lower courts have wrongly changed the established legal test, to absolve the United States from proving an essential aspect of the case, ie, whether there has in fact been copyright infringement.
The respondents’ appeals under the Act were required to be made by way of case stated on questions of law only. Concurrently with their appeals, the respondents filed applications for judicial review of the District Court’s determinations on eligibility for surrender and stay applications filed by the respondents. They sought to review the process followed by the District Court, which they say was unfair, and for errors of law to be considered in that context.
The High Court considered only one aspect of the judicial reviews, as it considered all the other grounds could be considered within the context of the case stated appeals. When granting leave to appeal, however, the High Court said the stay applications should be considered under appeals as of right against the judicial review decision (Ortmann v United States of America  NZHC 1809).
The Court of Appeal, for its part, labelled the judicial review proceedings as an abuse of process, finding that the respondents were “attempting… to circumvent the carefully circumscribed appeal rights under the Extradition Act”. That is, where appeal rights are deliberately limited (such as to errors of law only), the courts’ jurisdiction cannot be expanded by recourse to judicial review.
Why does this matter?
The United States argues that New Zealand is bound by treaty to surrender persons located here for conduct that, while criminal in the US, is not criminalised under New Zealand law. This has obvious relevance to everyone in New Zealand in terms of certainty of the law. So much of our lives and businesses is conducted online, with servers generally located in numerous foreign jurisdictions. In accordance with what criminal law are Kiwis to conduct their behaviour?
Further, rather than make out a traditional prima facie case, the US has (thus far) successfully argued for the legal test to be narrowed down in its favour. As the respondents have submitted in the Supreme Court, there is no precedent in New Zealand or any comparative jurisdiction for a conduct-only or “essential criminality”-only test to be applied under s 24(2)(d): the approach proposed by the US relies on a novel interpretation of case law relating to categorisation of offences under s 24(2)(c).
Depending on how the copyright/Crimes Act relationship is dealt with by the Supreme Court, this could have far-reaching implications in New Zealand. For example, private individuals who infringe copyright online may unwittingly become liable for criminal prosecution under the Crimes Act, despite not being criminally liable under s 131 (which is limited to infringement in the course of a business). ISPs in New Zealand, and overseas ISPs providing services to New Zealanders, will obviously be concerned as to the extent of their own potential criminal liability in this country for users infringing copyright online. It is not unrealistic to imagine this could have an impact on availability of online services for New Zealanders.
Quite apart from extradition law, the Court of Appeal’s findings on judicial review constitute a substantial limitation on the Court’s inherent supervisory jurisdiction. Where rights of appeal exist but are limited to questions of law, the effect of the Court of Appeal’s decision is that judicial review is unavailable. Given the diverse and numerous contexts in which appeals are limited in this manner, such a constraint could have a wide impact.
It follows that, while extradition itself is not a commonplace subject, the forthcoming decision of the Supreme Court is likely to have broad application and relevance to us all.
Along with Grant Illingworth QC, Peter Spring and Amanda Hyde represent two of the requested persons in the Dotcom proceedings.
Last updated on the 1st November 2019