Overseas investment should be based on a clear set of principles that are applied without fear or favour and acknowledge the limits on foreign control. Such can never be the case when government ministers, responding to any prevailing whim, tinker endlessly.
As much happened in late 2010 when it was first revealed that a Chinese company was seeking to buy the Crafar dairy farms. The resulting confusion has surely played a leading part in the chain of events that led yesterday to Justice Forrie Miller ordering the two ministers who agreed to the Shanghai Pengxin purchase to reconsider the application.
Justice Miller found that the economic benefits to New Zealand of the Chinese company's ownership of the in-receivership farms had been overstated in the Overseas Investment Office's recommendation to the ministers. He said that the benefits flowing from Shanghai Pengxin's purchase in terms of bringing the farms up to a proper standard were likely to accrue no matter who owned them.
That being so, the economic benefits caused by the overseas investment had been materially overstated in the OIO's recommendation.
It seems clear from his finding that the Government's most recent adjustment to the overseas investment regulations has done the OIO no favours. These dictated that where overseas investments involve large tracts of farm land, economic benefits to the country, New Zealand's economic interests and mitigating factors, such as opportunities for local involvement and jobs, should be of "high relative importance".
The Chinese application appeared to be carefully tailored to meet these guidelines, including an acceptance of quite restrictive conditions. On that basis, the OIO's green light was unsurprising.
Yet at the same time, the OIO has been found to have erred in relating the requirement for economic benefit to other potential New Zealand buyers.
"It advised the ministers that the act does not require an overseas investor to do more than a New Zealand investor would do, but asks only whether the investment is likely to benefit New Zealand," Justice Miller notes. Therefore, it treated the likely behaviour of any alternative buyer as irrelevant.
All things being equal, there should be no question that the farms should go to Shanghai Pengxin, which has agreed to pay the Crafar receivers considerably more than New Zealand investors, including the consortium led by Sir Michael Fay, believe they are worth. That, indeed, remains the most likely outcome.
Justice Miller says that a reconsideration incorporating the likely behaviour of any alternative buyer need not take long.
"On the face of it, the OIO may simply recalibrate its existing recommendation," he says.
But whatever happens, and whatever the Government's protestations that there is no damage to New Zealand's image, the High Court ruling has highlighted, once again, the muddy waters of the overseas investment regime. This has enabled Sir Michael, not for the first time, to use a legal challenge to upset what appeared to be the normal order of things. The saga over the Crafar farms is beginning to bear more than a passing resemblance to his extraordinary America's Cup big-boat escapade.
Justice Miller's ruling will not go unnoticed by overseas investors. They want certainty, not the possibility of an application being overturned in this manner even after a series of special conditions had been accepted. It is time that a clear set of principles was adopted - and adhered to.