An alleged people-smuggler has won a reprieve in the Supreme Court and his extradition to Australia now rests in the hands of Justice Minister Andrew Little.

Iraqi refugee Maythem Radhi, who has lived in New Zealand with his wife and three children since 2009, is wanted in Australia on charges related to the sinking of a boat that was carrying asylum seekers from Indonesia to Australia.

The vessel sank and an 353 people died.

He is fighting the extradition based on a section of the Extradition Act that can refer the case to the Justice Minister if extradition would be unjust because of "compelling or extraordinary circumstances".

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In a decision released today, the Supreme Court has ruled in his favour in a three to two majority decision.

Little said he will gather all the relevant information and look to make a decision early next year.

"I must now make that [decision] personally. I get the information provided by the Australian Government and any other relevant information that's already gone before the courts, and I make a decision based on the criteria that I'm required to take into account under the Immigration Act."

The Supreme Court found that Radhi, if convicted, would end up in "immigration limbo".

He would be classed as an "excluded person" under the Immigration Act and may not be allowed to return to New Zealand. Nor would he be returned to Iraq because of Australia's non-refoulment obligations.

"There is a substantial risk that, if Mr Radhi is convicted, he will be unable to return to New Zealand," the court's judgment said.

"If Mr Radhi cannot return to New Zealand, there is a real risk that he will be subjected to the mandatory detention and immigration limbo."

The risk of immigration limbo could be avoided by the Immigration Minister granting him a visa that would permit him to return to New Zealand after a trial in Australia.

Justices Ellen France and JJ McGrath, in a dissenting view, thought that the clause about "compelling or extraordinary circumstances" should have a narrower focus.