The three-judge panel of the 2nd U.S. Circuit Court of Appeals seemed eager to explore whether U.S. constitutional protections should apply to people like Maher Arar, 37, who was labeled a member of al Qaeda when he switched planes at Kennedy Airport in 2002 as he returned to Canada from vacation.
He was released without charges and returned to Canada after spending nearly a year in a Syrian prison.
"What was done to this man was absolutely dreadful," Judge Robert Sack said at one point.
Several weeks ago, members of Congress apologized to Arar as he testified by video from Canada before a joint hearing of a House subcommittee about what he called the "immoral" terrorism-fighting program known as extraordinary rendition.
The practice allows the government to grab suspected terrorists in one country and fly them to their home country or another where they are wanted for a crime or questioning.
In a large courtroom packed with several hundred spectators, the judges heard arguments for more than an hour in the case. They did not immediately rule on whether a federal judge in Brooklyn was right to toss out the case Arar brought against the U.S. government.
Judge Robert Sack repeatedly questioned Jeffrey Bucholtz, a deputy assistant attorney general, about the limits of U.S. government authority.
"The Constitution doesn't apply to aliens abroad," Bucholtz said. He added that it was "not designed to govern what happens the world over."
At one point, Sack asked: "Is this a form of outsourcing?"
Bucholtz said many of the decisions made about Arar as he passed through the airport in Brooklyn in 2002 were made by immigration authorities, prompting Sack to say that the case seemed "to be not an immigration case but an interrogation case."
Sack said: "They could have figured out a way to be sure he got on a plane to Canada."
Judge Jose Cabranes questioned whether there had been enough information developed about the case to throw it out at such an early stage of litigation.
"Doesn't it matter what the views of Canada or Syria would be?" he asked.
Bucholtz said relations between the United States and Canada would be further complicated if the lawsuit were allowed to proceed, because lawyers would explore why the countries have different positions as to whether Arar poses a security threat.
Arar remains on a U.S. government watch list. The Canadian government has apologized to Arar for its role in the case and agreed to pay him almost $10 million in compensation. A Canadian investigation concluded the Royal Canadian Mounted Police wrongly labeled Arar an Islamic fundamentalist and passed misleading and inaccurate information to U.S. authorities.
David Cole, who argued on Arar's behalf, said the United States violated Arar's rights by blocking his access to U.S. courts, by subjecting him to torture in Syria and by violating his rights to challenge his detention.
"He is not a member of al Qaeda and has no connection to al Qaeda," Cole said.
Cole said the U.S. government should be forced to pay damages to Arar because it made decisions in the United States that it knew would violate his rights.