Today the New Zealand High Court ruled on the application of the U.S. for review of Judge Harvey's order. The ruling is here. The U.S. argued the disclosure order exceeded the District Court’s jurisdiction under the Extradition Act and US-New Zealand Treaty; that the U.S. would be prejudiced because it will have to give greater disclosure at an earlier time than U.S. law requires; that it would take 2.5 months to copy the data, which would be beyond the August 6 extradition hearing date; and that it would cost the U.S. too much money.

I read today's order as a win for Kim Dotcom, because the Court accepted a proposal from Kim Dotcom's lawyers and told the U.S. to start copying the data now, even though further court review of the disclosure order could result in it being overturned. Also, the High Court's ruling includes some telling statements about how the Court views the actions of the U.S. to date, and they mostly favor Kim Dotcom.

Assistant U.S. Attorney Jay Prabhu, who is prosecuting Kim Dotcom et al in the Eastern District of Virginia, filed an affidavit in support of the application by the U.S. for judicial review of Judge Harvey's order. Today's order recounts what was in it:

Mr Jay Prabhu, an Assistant United States Attorney with the Eastern District of Virginia, has sworn an affidavit in which he says that the obligation on the prosecution to give discovery is triggered when a defendant first makes his appearance before a Court in the United States. The government has an obligation to provide the defendant with access to any items that were obtained from or belong to the defendant, if the items are in the government’s possession, custody or control. Those items are subject to inspection, copying or imaging. Any costs of copying or imaging are borne by the defendant, but impecunious defendants may request funding from the trial Court for that purpose.

The government also has an obligation to provide the defendants with access to any items that it intends to use in its case in chief at trial or that are material to preparing the defence, if the item is in the government’s possession, custody or control. Again those items are subject to inspection, copying or imaging and any costs of imaging or copying are borne by the defendant. Again an impecunious defendant may request funding from the trial Court. Defendants have reciprocal discovery obligations.

He says that the United States is opposed to providing defendants with discovery or disclosure while they are awaiting extradition because they have not surrendered to the jurisdiction of the United States Court, which is the initial step upon which discovery law in the United States is premised. Moreover, government attorneys do not provide discovery before an attorney enters their appearance in the United States because of the ethical obligations government attorneys have to protect the confidentialities of their client.....

As to the strength of the case, the applicants [U.S.] say that there is clearly a serious issue to be tried in these proceedings because no New Zealand Court has previously ordered disclosure in extradition proceedings to such an extent or on such grounds. Ordering disclosure on such terms is inconsistent with New Zealand’s obligations under the Treaty, and unless corrected, will place New Zealand well outside the disclosure regimes that operate in comparable jurisdictions.

[The U.S.] says if the effect of the order is not suspended, it will in any case be quickly in default. This is because the 21 day period for compliance is too brief. The material captured by the order includes intercepted emails that exceed 10 million in number. There are in addition it says, voluminous financial records obtained from a number of different countries. The investigation has included analysis of computer servers rented in United States by the respondents’ business, the contents of which are very large.

....Special Agent Michael Postin of the Federal Bureau of Investigation stated [in an Affidavit] that the New Zealand items alone are estimated to contain more than 150 terabytes of data, and it has previously taken 10 days of full time work to image certain items representing 29 terabytes. The process of providing forensic images of the New Zealand items not already copied will take a minimum of two and a half months. The disclosure order also does not resolve the issue of encryption. The United States is not able to provide readable copies of the items it has imaged while much of the content remains encrypted.

Kim Dotcom's lawyers contend:

[T]hey will be prejudiced by any stay as it will inevitably result in an adjournment of the hearing on 6 August 2012. Mr Akel for Mr Dotcom suggests a compromise position. The applicant should commence copying documents and hard drives preparatory to providing disclosure. But should the application for review be successful that disclosure need not be delivered to the first respondents in compliance with Judge Harvey’s existing orders.

The U.S. maintained Kim DotCom would not be prejudiced by a stay of the disclosure order. The High Court today disagreed and sided with Kim DotCom on this issue:

It is now more than seven months since the first respondents were arrested. During that time they have been in prison for a period and until relatively recently have been subject to restrictive bail conditions. Two of the first respondents are effectively being detained in a foreign country away from their families and ordinary places of residence. [Kim DotCom et al] made plain that they wish to keep the 6 August date for the extradition hearing. If a complete stay were issued, that date would inevitably be lost. Whilst it is certainly possible that, given the issues that remain outstanding between the parties, the 6 August 2012 date will be jeopardised, the [U.S.] as the prosecuting party, must accept an obligation to do all that it can to maintain that date. (my emphasis.)

The Court today also rejected the U.S. argument that the U.S. would be prejudiced by having to provide the requested material:

As to the issue of prejudice caused to the applicant if it is compelled to give disclosure at this time, there is merit in the point made by the first respondents [Kim Dot Com, et al] that the applicant must already have assembled what it considered relevant material before it sought the approval of two grand juries for the laying of the indictment and the amended indictment. There may be additional expense involved for the applicant in compiling the particular disclosure ordered, and that is a factor to be weighed. However, in assessing the weight to be attached to this prejudice I consider relevant that the applicant has ample means, and that the expense involved in copying must be dwarfed by the other costs of an investigative and prosecutorial operation of this size . (my emphasis)

As to to the issue of the potential effect of judicial review over the U.S. disclosure obligations:

I accept there is a serious issue to be tried as to the extent of any disclosure obligations on the United States. In the absence of full argument it is not possible to conclude that the grounds for review are overwhelming, as the [U.S.] would have it. (my emphasis.)

The Court basically tells the U.S. to stop whining and get moving:

As to (d), the time that will be taken to provide the disclosure, the longer the United States delays in commencing copying for disclosure, the longer it will take. The compromise position advocated for by Mr Akel meets the concerns that the 21 day timeframe cannot be complied with.

The Court also rejected the U.S. argument about encryption:

I am told by [Kim Dotcom, et al] that they seek a clone of the encrypted hard drive, and that the absence of passwords provides no barrier to this. The evidence I have seen from the applicants does not contradict this assertion.

The Court says it accepts Kim Dotcom's compromise proposal and orders that while the U.S. can wait to actually turn over the documents until the court has ruled on the validity of the disclosure order, it has to begin copying now: Harvey's disclosure order, the U.S. to begin copying now:/p>

This order is made on condition that, if the applicant has not already done so, it must immediately commence preparation of the disclosure that has been ordered.

The High Court ordered a two day hearing be set as soon as possible for the judicical review hearing.

So the U.S. is told it has to start the expensive cloning/copying process now, even though if it prevails in overturning the disclosure order, it won't have to turn the material over.

Will this affect the stalemate in the Court in the U.S. over whose expense it is to obtain the material from the MegaUpload servers hosted by Carpathia? Or whether the funds seized from Kim Dotcom and Megaupload can be used for that purpose?

The prosecution of MegaUpload and Kim Dotcom, et. al. just got a whole lot more expensive for the U.S. -- and its taxpayers.