The nation's intelligence agency watchdog is investigating the circumstances leading to former pilot Daniel Duggan's arrest after claims he was "lured" back to Australia to be arrested and extradited to the United States.
On Monday, Sydney's Downing Centre Local Court heard concerns from Mr Duggan's lawyers he had been lured back to Australia from China by US authorities, with the knowledge of Australian intelligence agencies, so he would be in a country where American authorities could launch extradition proceedings.
US authorities allege he helped train members of the Chinese military to fly fighter jets and are trying to get him stateside to launch criminal proceedings.
Mr Duggan's lawyer, Dennis Miralis, said the Inspector-General of Intelligence and Security (IGIS) has launched a formal inquiry into the matter.
The IGIS has the power to review the activities of Australia's six intelligence agencies, including the domestic spy agency ASIO.
Mr Miralis said his client was granted a security clearance by ASIO to obtain an aviation licence in 2022, shortly before returning from China.
A few days after he arrived in Australia, that security clearance was removed.
The 54-year-old father of six was moved to the maximum security area of Lithgow Jail, in the New South Wales Central Tablelands, last week and put into isolation.
"In these circumstances, we will be requesting that the Attorney-General and the US immediately end Dan Duggan's extradition in order to ensure the independence and integrity of the IGIS inquiry, which has now commenced," Mr Miralis said.
"Independent inquiries enable IGIS to fully investigate a matter, consider its legality, propriety and appropriate regard for human rights, and make recommendations to remedy any issues identified.
"These matters strike at the very heart of the lawfulness or otherwise of Mr Duggan's extradition."
Mr Duggan's legal team revealed his family had experienced a personal tragedy while he was locked up, with his 95-year-old mother dying in the US earlier this week after suffering a stroke.
Attorney-General Mark Dreyfus' office declined to comment.
The IGIS website says it "does not comment on any particular intelligence matter or current inquiry".
