Lawyers for a Perth man fighting extradition to Hungary as an alleged Nazi war criminal say the murder of a Jewish teenager in 1944 was not a war crime when it was committed.

Hungary issued an arrest warrant for Charles Zentai, 87, of the southern Perth suburb of Willeton, in 2005.

Zentai is alleged to have been with two other men who tortured 18-year-old Peter Balazs in Budapest in November 1944, leading to his death.

In August last year, Perth magistrate Barbara Lane ruled he was eligible for surrender to Hungarian authorities to face a war crimes charge.

His lawyers argued at the time Australia's treaty with Hungary included a 1945 decree which meant the offence Zentai was accused of was not an offence when the murder was committed in 1944.

But Ms Lane said the argument was "misconceived and quite misleading".

Zentai's lawyer Grant Donaldson, SC, told the Federal Court on Tuesday Ms Lane's decision should be reviewed.

"This offence simply was not an offence at that time," Mr Donaldson said.

There was a degree of confusion around the case and if Zentai had been charged with murder and his extradition was sought on those grounds the extradition would not have been a problem, Mr Donaldson told the court.

But Stephen Owen-Conway, QC, for the Crown, pointed to several court rulings which he said showed that Ms Lane did not have to take into account the fact that Zentai's alleged offence was not a crime at the time.

Mr Owen-Conway told Justice John Gilmour a number of cases also demonstrated that the treaty between Hungary and Australia did not affect the war crimes charge or Zentai's possible extradition.

Continuing Zentai's bail, Justice Gilmour reserved his decision on whether the federal attorney-general should be left to rule on his extradition.

Zentai, who has taken a lie detector test in what he says is a bid to satisfy everyone of his innocence, claims he is also under "tremendous pressure, physically and emotionally".

"Can you imagine the constant pressure and what it does to you," he told reporters before entering the Federal Court in Perth.

"My health has deteriorated considerably. I was just recently diagnosed with heart failure and (I am getting) other treatment for another heart disease I have.

"This is tremendous pressure for me."

Zentai said he had taken the lie detector test on Monday last week and had released the results, which he said showed he was telling the truth.

His son Ernie Steiner said if the appeal failed lawyers would take the case to the full bench of the Federal Court and to the High Court if necessary.

Mr Steiner said he would also expect Hungary to appeal against any decision in favour of his father.

Jewish human rights organisation The Simon Wiesenthal Centre lists Zentai as one of its top 10 most wanted war criminals.

If extradited, Zentai would be the first Australian citizen to face Nazi war crimes charges.

ninemsn.com.au