A lawyer for Kim Dotcom says revelations the Government's spy agency has acted illegally could have significant consequences in the case against his client.
The Government Communications Security Bureau is being investigated for illegally spying on Mr Dotcom, co-founder of the Megaupload website.
Mr Dotcom is facing copyright, money laundering and fraud charges in the United States. He and three co-accused were arrested in Auckland in January and US authorities lodged papers seeking their extradition in March.
Lawyer Paul Davison says one implication is that information obtained by the GCSB may be deemed inadmissible in court.
"It has implications in terms of the case, and goes right to the heart of whether or not there has been any Government activity that would give rise to issues that can be raised on behalf of Mr Dotcom," he says.
Human rights lawyer Tim McBride says New Zealand laws don't automatically exclude unlawfully obtained evidence. "You would have to hope that in this situation such evidence, if it's unlawfully obtained as the Prime Minister says, shouldn't be permitted in any court hearing."
Council urges GCSB review
Prime Minister John Key said on Monday the Crown filed a memorandum in the High Court in the Dotcom case, advising the court and affected parties the GCSB acted unlawfully while assisting police to locate certain individuals subject to arrest warrants issued in the case.
The Council for Civil Liberties says it is concerned this information only came to light from inspection of court documents and wants an investigation.
Spokesperson Thomas Beagle says it raises the question of how many other cases there have been of inappropriate spying on New Zealand people. "It needs possibly better oversight of the GCSB to make sure they're honouring their legal requirements."
The GCSB's role is to provide foreign intelligence to Government and it is not permitted to intercept communications of citizens or residents.
Mr Key ordered an inquiry by the Inspector-General of Intelligence and Security, Paul Nazor. Crown Law Office has confirmed a hearing will take place on Wednesday but will not reveal any information about it.
GCSB officials pandering to US, says opposition
The Green Party says officials probably broke the law because they were so keen to please the US government.
Co-leader Russel Norman says GCSB officials would have been influenced by the attitude of the Government, which appears to want to give the US whatever it wants.
New Zealand First leader Winston Peters says it is possible there was some pressure applied by the US, but that is no reason for a critical Government agency to have gone along with it or made a mistake.
Mr Key says he doesn't believe it was a result of officials trying to curry favour with the Americans, but says he will have to wait for the full report.
"GCSB are a thoroughly professional organisation in my view and I've never had an experience in four years where they've made a mistake.
"The cause of that error is something I would want to get full advice on before I started to apportion blame."
The agency shares its information with four overseas countries, including the United States.
Information 'unlikely to be disclosed'
Mr Dotcom is continuing efforts to get the US authorities to disclose evidence against him and his co-accused.
A human rights academic says information obtained illegally in New Zealand may already be with the US authorities but Mr Dotcom may never get to see it.
Auckland University associate professor Stephen Hoadley says it is not likely to be disclosed to Mr Dotcom, in order to stop him seeing other top secret information.