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Lai Changxing, right, is shown being escorted by a security guard from an Immigration and Refugee Board detention hearing in Vancouver, B.C., on Monday July 11, 2011.Darryl Dyck/ The Canadian Press

A case that's long been a thorn in Canadian-Chinese relations could be nearing a close Thursday, as the Federal Court weighs whether to ship fugitive Lai Changxing back to the People's Republic.

Mr. Lai is accused of masterminding an extensive smuggling network that imported consumer goods into the bustling port of Xiamen without paying custom duties. He's been fighting deportation since he was first arrested at a Niagara Falls casino in 2000.

Darryl Larson, one of Mr. Lai's lawyers, said Wednesday his client fears what will become of him if he's sent back to China.

"He thinks that something will happen to him while he's in jail, that he will die of some mysterious illness or something bad will happen to him."

Mr. Lai was arrested and ordered deported earlier this month after Immigration Canada ruled he's not at risk of being tortured. The government agency made that determination after four years of deliberation, and just days before Foreign Affairs Minister John Baird headed to China to bolster ties between the two countries.

During his trip, Mr. Baird hailed a "new era" in relations between Ottawa and Beijing and asserted a "strategic partnership" on matters such as energy, natural resources and international affairs. The minister also indicated Stephen Harper's government feels little sympathy for Mr. Lai's plight.

Mr. Larson will not be making arguments during Thursday's hearing - that task will be handled by Mr. Lai's other lawyer, David Matas. But Mr. Larson said one of the important issues that will be discussed is China's promise that Mr. Lai won't be tortured, and that he can be visited by Canadian consular officials.

"One [issue]that's obvious to me is whether diplomatic assurances should be relied on to the extent they are in this case," Mr. Larson told reporters outside Immigration and Refugee Board headquarters in downtown Vancouver.

Mr. Lai was arrested by border officials on July 7 and was quickly scheduled for a flight back to China. However, he won an interim stay of deportation from the Federal Court and was allowed to remain in Canada until his case could be heard.

He's been in custody since his arrest. The IRB, under whose jurisdiction Mr. Lai's detention falls, earlier ordered his release. But the government persuaded the Federal Court to overrule that decision and he remained behind bars.

On Wednesday, the IRB again ordered Mr. Lai's release, ruling that the Canada Border Services Agency did not make a strong enough case to keep him locked up. The CBSA had argued Mr. Lai was a flight risk.

Geoff Rempel, the board's adjudicator, said detention is not a matter of convenience and should only be used as a last resort. He said he was confident any flight-risk issues could be handled through terms and conditions, including a curfew and pledge not to associate with known criminals. The CBSA had argued Mr. Lai was linked to a gang called the Big Circle Boys and an illegal Richmond gaming house.

"I'm ordering Mr. Lai's release on terms and conditions because after hearing arguments and considering the evidence they've presented, I've concluded that the minister hasn't provided me with clear and compelling reasons to reach a different conclusion on this issue," Mr. Rempel said.

However, shortly after the ruling, government lawyers again filed an application with the Federal Court to review the IRB's order, a move designed to prevent Mr. Lai's release.

The CBSA has said it expects the Federal Court to decide whether to deport Mr. Lai on Friday. Border services said it plans to send him back July 25.

Mr. Lai's continued residence in Canada has been a sore point with Chinese leaders. Former prime minister Zhu Rongji once said Mr. Lai should be executed three times over.

In an interview with The Globe and Mail two years ago, Mr. Lai admitted skirting the law, but said he was merely taking advantage of perceived loopholes at a time of murky customs regulations.

In keeping with the theme for a case that's run longer than a decade, Mr. Larson said his client still has options if the Federal Court rules against him. He said Mr. Matas could ask the court to answer a certified question - essentially, issue an opinion on a question of law.

"[Mr. Lai and Mr. Matas would]have to get a certified question to go further. But I suspect that would be something they would seek to do."

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