UPDATE:

Kim Dotcom’s Queen's counsel Paul Davison says handing over FBI investigation material to the internet mogul’s legal team is consistent with the Extradition Act.

The US government, represented by Crown law, is at the Court of Appeal arguing a High Court decision on August 16 forcing the disclosure of the information should be overturned.

However, Mr Davison says the High Court and earlier, the District Court, were correct in ordering disclosure.

He said any process which does not include pre-hearing disclosure would severely limit an individual’s ability to engage in court proceedings.

“Consequently, the ability of the court to evaluate the case for extradition will be hindered.

"That could result in the court becoming wholly-dependent on information placed before it by the requesting state (in this case, the US).

"That means the process would become little more than a rubber stamp.”

He said there is no way disclosure is inconsistent with promises made under the US/New Zealand treaty which specifically provides the New Zealand law with the right to govern its own determinations around extradition.

Crown prosecutor John Pike, who is acting for the US government, said the scope of the investigation is proving to be a large one, with billions of emails and documents to process.

“It’s beyond comprehension.”

12.30pm:

Internet millionaire Kim Dotcom says the US government is using "bully-boy tactics" in trying to reverse an order for disclosure.

Mr Dotcom's appearance at the Court of Appeal today drew a large crowd of awestruck media, lawyers, police and public hangers-on eager to catch a glimpse of the jovial Auckland-based German giant.

On August 16, High Court chief judge Helen Winkelmann ordered the material held by US prosecutors be disclosed to Dotcom and his lawyers.

The finding was a result of an earlier District Court decision, deciding the US government has "a corresponding duty of disclosure".

The US Government now wants those decisions overturned, a move challenged by Mr Dotcom's lawyers Paul Davison QC and Willy Akel. 

Justices Terence Arnold, Christine French and Ellen France are hearing the appeal.

Mr Dotcom and his wife Mona arrived at court this morning to a hoard of waiting media, most seeing him in the flesh for the first time.

He arrived in typical fashion, flanked by private security.

Crown lawyer John Pike, representing the US government, says a committal hearing probably had limited powers to order disclosure.

"This is not a discovery exercise, it was a decision to establish a prima facie case," he says.

He admitsthere was a limited obligation to provide disclosure in the Extradition Act, but only for efficiencies, which do not apply to this case.

Mr Pike says if the evidence is solely relied on there is no power of the extradition court to order disclosure.

He believes the District Court took the position it could order disclosure simply because the act gives courts the power to.

Mr Davison argues the District and High Courts were correct in ordering disclosure.

For much of the hearing so far, there has been plenty of interest from the sidelines, with at least a dozen media representatives from all organisations present, along with members of the police, Crown prosecutors and lawyers also in the public gallery, alongside Mr Dotcom and his wife.

It has been an eventful 24 hours for Mr Dotcom, after he dropped into parliament yesterday afternoon to sit in on question time, as an absent ACT MP John Banks faced continued questioning over the treatment of "anonymous" donations for his 2010 Auckland mayoralty campaign, one of which came from Mr Dotcom.

Before entering the House yesterday, Mr Dotcom told waiting media Mr Banks had been through a lot and it was time to move on.

Although he does not believe the Epsom politician should still be an MP.

bcunningham@nbr.co.nz