Tainui chairperson Tukoroirangi Morgan says Hamilton City Council needs to abide by a High Court ruling over zoning rules, rather than fight the tribe in court.
The council's Variation 21 limited commercial development to a ring around the central business district - which would have stalled development of Tainui's Base retail and office centre on the city's northern fringe.
Waatea News reports the High Court ruled that the change was illegal because the council failed to consult the iwi.
But Hamilton mayor Bob Simcock says the council will appeal, because the ruling gives Tainui more rights than other property developers.
Mr Morgan insists Tainui acted within the law.
