The federal attorney-general is fighting to redact a court ruling that denied a secret trial for former Witness K lawyer Bernard Collaery.
Anna Mitchelmore SC argued on behalf of the prosecution in the ACT Supreme Court on Tuesday sections of the National Security Information Act prevented the publication of the entire judgment.
Mr Collaery's counsel Christopher Ward SC said the previous judgment had determined there was no national security detriment to having parts of the case held in open court.
The prosecution have until Wednesday to appeal the ruling to the High Court.
The court was closed to journalists and the public 40 minutes into Tuesday's hearing.
Human Rights Law Centre senior lawyer Kieran Pender said the case erodes public confidence in the justice system and sets the precedent for political prosecutions.
"People who tell the truth about wrongdoing should be protected, not punished," he said outside the court.
"The next step in this sorry saga should be to drop the charges altogether, not to argue for more secrecy, at a secret hearing, about a judgment that said no to a secret trial."
Mr Collaery is accused of unlawfully sharing classified information about the alleged bugging operation of negotiations to carve up lucrative oil and gas reserves in the Timor Sea in 2004.
He faces five charges alleging breaches of the Intelligence Services Act by communicating information to various ABC journalists that was prepared by or on behalf of the Australian Secret Intelligence Service.
The Commonwealth Director of Public Prosecutions backed the continuing prosecution of Mr Collaery at a Senate estimates hearing last week.
Director Sarah McNaughton said it remained in the public interest to continue to prosecute Mr Collaery 17 years after the alleged bugging operation occurred and eight years after his home was raided.
Almost $4 million in legal fees had been racked up by the government as of July 2021.
Witness K received a three-month suspended sentence and a 12 month good behaviour bond in April after admitting to conspiring to reveal classified information.
Australian Associated Press
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