The Government's decision to allow the sale of the Crafar farms to a Chinese conglomerate should be overturned because ministers failed to take into account the directors' lack of relevant business experience, a court has been told.
Shanghai Pengxin's $200 million deal to buy the 16 North Island farms is on hold, pending the legal challenge at the Court of Appeal in Wellington.
The appeal is the latest bid by a group of Maori and farmers led by Sir Michael Fay to overturn the deal after its own offer for the farms was rejected.
Alan Galbraith, QC, who represents the Independent Crafar Farms Purchase Group, told the court on Monday the law requires that individual directors have relevant experience.
Mr Galbraith said the Overseas Investment Office failed to establish that Shanghai Pengxin's directors had the necessary business background.
He told the court it is not enough that the farms will be managed by state-owned company Landcorp because it is the people making the decisions who have to understand the business.
However, Crown lawyer David Goddard, QC, told the court the directors have experience in running a large conglomerate which is relevant to the Crafar operation.
The three judges have reserved their decision.
The New Zealand Crafar Farms Purchase Group successfully challenged the Government's initial approval of the sale.
Earlier this year, the group secured a judicial review of the sale to the Chinese company, but that failed to overturn that decision.
