Court action to block the partial sale of Mighty River Power could be initiated "within an hour" if the Government decides today to proceed with the sale this year, the Maori Council says.

Expectations are mounting that the Government will press on in the belief it will win any court challenge and can address Maori concerns through negotiations.

Following today's Cabinet meeting, Prime Minister John Key is expected to announce whether his Government will press on with the sale this year in the face of the Maori Council's challenge over water rights, and electricity market uncertainty sparked by major industrial power users.

Yesterday, Maori Council co-chairman Maanu Paul told the Herald his organisation was "already geared up" to begin a court challenge should Mr Key announce that the Mighty River part-sale was on.


The council could file court papers "within an hour" of an announcement.

Mr Key said this morning on TVNZ's Breakfast programme the Government could not stop any legal action.

"If someone wanted to take legal action against the Government, we can't stop that, but it's for the courts to decide whether they want to hear an application to them.

But he said if a case was taken to court, he hoped the Government would win.

"The Government's view is also that no one owns water and that's quite a different view to the Maori Council's view,"he said.

Early this year, the Maori Council led a claim to the Waitangi Tribunal that the partial sale of Mighty River scheduled for late this year should be postponed until Maori Treaty of Waitangi rights and interests in water were examined and dealt with.

In a decision fast-tracked at the Government's request, the tribunal said the sale of shares in the company could affect the Crown's ability to deal with Maori water rights, and recommended the float be delayed.

It also recommended that the Crown sit down with iwi leaders and the council to negotiate a way forward on the issue.

Lawyer Donna Hall, who represented the council, said there had been no sign that the Government planned to accept the tribunal's recommendations.

"Those indicators all say that in a situation of this extreme urgency, if there was going to be an attempt to try to really come to grips with the tribunal's finding that the matter be adjourned, we would have heard by now and we haven't," Ms Hall said.

An investment-banking source involved with the Mighty River sale said there had been no word from the Government on whether it would proceed.

"My pick is it goes ahead," the source said.

Although an injunction to halt the part-sale while the water-rights issues was examined further was seen as almost inevitable, the source said the Government was confident a court action would be settled swiftly in its favour.

"That's simply because the court would look at it and say, 'Well, whatever claim you think you have now, you'd still have it. Nothing in selling some shares in this entity would stop that'."

The source believed the legal challenge could be dealt with while work continued on the float to enable it to take place this year.

Meanwhile, the Government may also advance a compromise solution in which it continues to work towards the sale this year while holding negotiations with iwi over the issues the tribunal has highlighted.

1. Proceed with the Mighty River sale this year, setting aside the Waitangi Tribunal recommendation.
Risk: A further legal challenge, which could eat up valuable time even if it was unsuccessful.

2. Go ahead, but hold talks with Maori over rights and interests in water.
Risk: Keeps the asset sales on track, if a little slower, while showing good faith with Maori.

3. Postpone the sale.
Risk: Puts pressure on the sales programme and the Government's policy to control Crown debt. May only postpone threat of a legal challenge.