An expert in Māori law says the Government may have been acting outside its power over the sale of public land in Auckland, which was in the process of being offered to iwi.
The Government insists it has no obligation to give the right of first refusal to iwi to purchase the surplus Crown land, and it is now facing a court challenge from Ngāti Whātua and Tainui.
But a senior lecturer at the School of Law at Victoria University said in the settlement Act made between iwi and the Crown last year, it was clear iwi should have been given the first right of refusal.
Dr Carwyn Jones of Ngāti Kahungunu said there were some instances outlined in the Act where that process could be bypassed, such as when the land was being held for state housing.
But, he said in this instance the land wasn't being held for state housing and the Government would have a hard time proving otherwise.
"I don't know exactly how the Government is intending to argue this. There doesn't seem to be much scope for it to argue that it is acting consistently with the settlement legislation," he said.
"The settlement legislation is very clear that only in these very limited circumstances can this land be disposed of without going through the right of first refusal process and those options that seem as they could apply, run into issues."
Mr Jones said if the Government's plans to sell to the land to private developers went ahead, that would be in breach of the settlement legislation.
"There are different instruments which are in play here. There's the settlement legislation, other pieces of legislation, but also some of the protocols that came with the settlement, and under all of those, the Government faces considerable challenges in demonstrating that it's acting within its powers but also that it's acting in good faith as a responsible Treaty partner.
"It does seem that what it is proposing would be in breach of the settlement legislation."
Housing Minister Nick Smith did not respond to requests for comment.