By Alex Tarrant
The government is in a "terrible position" in the Crafar farms saga, and Prime Minister John Key is uncomfortable about Ministers making further decisions on Shanghai Pengxin's application to buy the 16 farms before they fully understand overseas investment rules which appear to have been tightened by a court ruling.
The High Court ruled earlier this month that the Overseas Investment Office did not apply overseas investment rules properly when processing Pengxin's bid for the farms. It made the OIO set aside its approval and reconsider its decision with different rules concerning the economic benefits Pengxin proposed to bring to New Zealand through its purchase.
The government is currently seeking advice from Crown Law on the ruling, which acts as law until the government revises legislation in Parliament, or it is reviewed in the Court of Appeal or Supreme Court. Key was asked if this meant uncertainty about the law might remain for a number of years until these avenues have been taken. "It may or may not," Key replied.
A local group of investors led by merchant banker Michael Fay has already taken part of the High Court's latest ruling to the Court of Appeal.
Speaking to media at his post-Cabinet press conference in Wellington Monday afternoon, Key said the government was keen to make sure that the Overseas Investment Office fully understood the judgement from Justice Miller of the High Court.
"It’s critically important that not only do they...understand the new interpretation of that law, but that the Ministers that are asked to approve or decline that application fully understand the law," Key said.
"Until that position is clarified, I think it would be extremely dangerous for any party – the Ministers, or the OIO – to move forward,” he said.
The two Ministers responsible are Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman.
It was possible the government would seek a declaratory judgement of what the High Court decision actually meant in terms of how the law should be applied, but the government had still not received advice on that.
"I’m not making a case that the ruling is wrong or right, I’m just simply saying the critical factor now is understanding it," Key said.
"Until I’m in a position, and everyone’s in a position to understand that, I think that leaves the government in a terrible position, because Ministers ultimately could be judicially reviewed again, and nobody wants to be in that position,” he said.
There were still two more avenues for appeal in the courts for the Pengxin decision, the Court of Appeal and the Supreme Court, which could mean uncertainty for some time yet.
"Certainly from the Ministers' point of view, I'd be very uncomfortable with them making a decision, because they have sole responsibility, unless they fully understand the law."