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Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman said today’s High Court judgment on the judicial review of Shanghai Pengxin’s bid to acquire the 16 Crafar farms provides a new judicial interpretation of complex legislation.
The High Court considered the case on two grounds. These were:
1. Under section 16 (1) (a) of the Overseas Investment Act and whether the bidder had the relevant business experience and acumen.
2. Under section 16 (1) (e) (ii) and (iii) which requires the investment to deliver substantial and identifiable benefits to New Zealand. These are measured by 21 factors outlined in section 17 of the Act.
On the first issue, the Court found Ministers had applied the correct test under section 16 (1) (a) and there were no grounds for review on the basis of relevant business experience and acumen.
On the second issue, the Court ordered the decision to approve the sale be reconsidered. The Court’s ruling calls for a different test to be applied to the economic factors in section 17 of the Overseas Investment Act than the Overseas Investment Office had previously applied.
Instead of applying a ‘before and after’ approach to the economic factors in section 17, as the Overseas Investment Office did in its recommendation to Ministers, the Court has ruled those factors should be assessed by asking what would happen ‘with and without’ the overseas investment. In this case, it is likely this will only apply directly to four of the 21 factors – section 17 (2) (a) (i), (iii), (iv) and (vi).
“This ruling changes the interpretation of how the economic factors in section 17 should be assessed,” Mr Williamson says.
In light of this ruling, the Overseas Investment Office will now apply an approach consistent with the Court’s ruling and resubmit a recommendation report to Ministers.
“We don’t have a clear timeframe for this process but expect to receive the resubmitted recommendation report from the Overseas Investment Office in a matter of days, not weeks,” Mr Williamson says.