Eddie Obeid's barrister has told the state's highest criminal court that it is "an affront to the dignity of Parliament" for the courts to set standards of conduct for politicians and the former MP should not have stood trial for criminal misconduct.

Obeid, 73, was jailed in December for a maximum of five years after a Supreme Court jury found him guilty of misconduct in public office over his secret business dealings at Circular Quay.

He is appealing his conviction and sentence in the Court of Criminal Appeal, which began a three-day hearing on Monday.

His legal team, led by Guy Reynolds, SC, argues the Supreme Court did not have the power to hear Obeid's case because breaches of the MPs' code of conduct are within the "exclusive cognisance" or jurisdiction of Parliament, rather than the courts.

Mr Reynolds told the five-judge bench on Tuesday it was an "affront to the dignity of Parliament" for the court to assert "that it knows better than Parliament" what standards of conduct should apply to MPs acting in their official capacity.

He said this would lead to the courts and Parliament "imposing inconsistent standards" upon MPs.

Mr Reynolds said there was a "moot point" about whether the NSW Parliament could imprison someone for a breach of the MPs' code of conduct, although there was "no doubt" the Commonwealth Parliament had the power to impose prison sentences.

Mr Reynolds said Obeid had not breached the code of conduct by failing to disclose his family had a financial interest in two Circular Quay cafes when he lobbied a senior maritime bureaucrat.

"Look at what the rules are," Mr Reynolds said of the code of conduct.

"There's no conflict here. When you actually look at the rule book there's nothing there."

A five-judge bench including chief justice Tom Bathurst is hearing the appeal because of the legal significance of the arguments about the jurisdiction of the courts to hear cases involving misconduct in public office.

Justice Mark Leeming asked Mr Reynolds what would happen if there was "a murder" by an MP "just outside the [parliamentary] chamber".

"We don't deny both [the courts and Parliament] could deal with murder," Mr Reynolds said.

Obeid, dressed in prison greens, appeared in court via videolink from Silverwater jail.

His family, including wife Judith and middle son Moses, have been prominent spectators in the ceremonial Banco Court in Sydney's Supreme Court complex.

Obeid and his son Moses are facing a new trial with former NSW Labor minister Ian Macdonald over an alleged coal deal involving the Obeid family's rural property at Mount Penny in the Bylong Valley.

The men will enter their pleas in the District Court on Friday.