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News & Knowledge

A shrinking world: A major extradition case in New Zealand

10th November 2016
Keegan Alexander

MSI's New Zealand law member Keegan Alexander reports on its recent major extradition case involving cloud storage company Megaupload.

It is frequently said that the Internet has broken down borders and that globalisation is now a reality. The impacts of the World Wide Web are well illustrated in a major extradition case argued before the High Court at Auckland, New Zealand in August-September this year. The United States of America is seeking to extradite Kim Dotcom and three other executives of a cloud storage company known as Megaupload.

The United States has charged all four with a raft of serious offences in Virginia, spanning copyright infringement, racketeering and money laundering.  What is remarkable is that none of the defendants is a citizen of the United States: neither have any of them ever lived or done business there (Megaupload was a Hong Kong company, although it did maintain some servers in the United States).

Another interesting feature of the case is what has happened to the assets of the Megaupload executives while they defend extradition in Auckland.  At the time of their arrest in 2012, all of their assets in various jurisdictions such as New Zealand, Hong Kong and Australia were frozen by the United States pursuant to reciprocal enforcement regimes entered into by the US with those other countries. There are no assets in the United States.

Not content with freezing the assets, the United States then moved its own courts to forfeit all the overseas assets, which are being used (in accordance with relief orders) to fund the Megaupload executives’ extradition defence.

Unsurprisingly, the Megaupload executives filed papers in the US courts to prevent that happening. However, last year, they were declared fugitives under US law on the grounds that they had not come to the US to defend the charges. Being fugitives, so the US court held, they had no right to defend the forfeiture proceedings and, accordingly, judgment was entered against them in the US, forfeiting their assets worldwide. They were declared fugitives even though they have never lived in the US or ever fled from that jurisdiction (this decision is currently under appeal in the United States).

Returning to the extradition itself, the hearing in Auckland this year was an appeal against, and judicial review of, a December 2015 District Court decision holding them eligible for extradition. The Megaupload executives deny that they are eligible for extradition under NZ law, and say that the United States has perpetrated an abuse of process by attempting to forfeit monies representing the Megaupload executives’ only means of defending extradition.

The High Court hearing concluded on 28 September 2016, and judgment was reserved.  Watch this space!

Keegan Alexander has represented two of the Megaupload executives since late 2014 and partner, Peter Spring, and senior solicitor, Amanda Hyde, appeared in the High Court earlier this year seeking to overturn the eligibility decision.

About Keegan Alexander - Auckland

Keegan Alexander is a leading boutique law firm based in Auckland. The firm is widely acknowledged for its expertise in the areas of commercial law, commercial property and commercial litigation with a strong emphasis on insurance law and insolvency law.

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