Lochinver: A turning point for overseas investment in NZ?
Lochinver: A turning point for overseas investment in New Zealand?
The High Court is going to consider whether the Government was correct to decline the application by Chinese owned company Pure 100 Farm Limited to buy Lochinver Station, a 13,800 hectare farm near Taupo. The application was rejected by the Associate Minister of Finance and the Minister of Land Information in September 2015 on the grounds that the application did not satisfy the test in the Overseas Investment Act 2005 of creating a “substantial and identifiable” benefit to New Zealand. The Ministers agreed that the deal would create benefits, but found that these were not enough to meet the test.
This decision has had wide-ranging implications. New Zealand farmers rely in part on foreign purchasers to help maintain farm valuations, which affect their businesses even if they don’t want to sell. Foreign investors, already concerned about the costs and delay of getting Overseas Investment Office (OIO) consent to buy land, now have to factor in uncertainty about the benefits they will need to deliver in order to make a successful application. Land sales to foreigners are always a political hot potato. So, there is plenty at stake.
Among other factors, the Court will probably need to consider the extent to which Ministers have a free hand to decide what amounts to a “substantial and identifiable” benefit to New Zealand, whether the process followed by the OIO and the Ministers complied with the requirements of the Act, and whether a previous High Court decision on overseas investment concerning the Crafar farms was correctly decided. The likelihood is that the outcome will not please everyone.
We see this as a real opportunity to bring some badly needed clarity and certainty to the law, which has become unnecessarily complicated and unpredictable. Overseas investment cases are rarely considered by the courts, so this is a case that should interest anyone concerned with farming, New Zealand’s ability to attract investment, and the economy generally.
Chen Palmer specialises in advising on overseas investment issues and public law litigation.