The Maori Council says if the Government does not take a Waitangi Tribunal report on water rights seriously, it will consider legal action.
The tribunal has told the Government it should stop the partial sale of state owned power companies until it has sorted out Maori water rights.
Maori Council co-chair Sir Eddie Durie says if the answer from the Government is no to the tribunal's recommendations, then the next step is court.
On Friday the tribunal issued an abbreviated version of its report on the council's urgent claim on freshwater rights, after the Government asked it to report back early so it could consider the findings before starting the share float for Mighty River Power next month.
The report says the Crown would be in breach of the Treaty of Waitangi if it proceeds with the partial sale of state-owned power generators without recognising Maori rights to water.
The council argued in its claim that the water going through hydro turbines effectively would be commercialised.
The tribunal says shares on their own would not be a remedy for any potential breach of Treaty rights.
It calls for shares to be offered in conjunction with giving Maori greater say in the running of the companies.
The tribunal has also found the rights granted to Maori under the Treaty in 1840 could be equated with residual property rights.
Court could be next step - Council
Sir Eddie Durie told Checkpoint the report was a very good one for the council and the claimants,
But he says if the answer from the Government to the tribunal's recommendations is no, then the next step is court.
Sir Eddie says going to court would be a very sad outcome for everyone.
"You don't get rounded results from courts; you get legal answers to specific issues. But if it has to be, there that's sadly where one would have to go."
Government Ministers will consider the report and talk to the Maori Party as they prepare to make decisions in early September about share offers.
Earlier, Sir Eddie's co-chair Rahui Katene said she was delighted by the findings, telling reporters she hoped the Government would consider them carefully.
A Ngati Rangi claimant, Toni Waho, says the report recognises there are two legal systems in this country.
He also says the economy cannot be put right by trampling on the rights of Maori.
Opposition parties want sales halted
Labour Party leader David Shearer says the Government can't ignore the recommendations. He says the report has serious implications for the proposed asset sales.
"We have a situation where Maori believe their rights are going to be infringed by the sale, and we're suddenly faced with this impossible deadline by which to try and negotiate through an outcome.
"It's certainly not going to be something I believe that will be seen as being fair in the eyes of all New Zealanders, and it's likely to be expensive."
Mana Party leader Hone Harawira says the ruling throws a serious spanner in the works of the Government's asset sales programme.
Mr Harawira says it shows the asset sales programme should be cancelled altogether.
Green Party co-leader Russel Norman also says the sales programme must stop.
"The Government will now go through the pretence of reading the report and giving it due consideration but John Key has made it very clear that the Government doesn't consider the Waitangi Tribunal an important institution; it doesn't consider the Treaty of Waitangi important, and it intends to ignore the report.
"I think that kind of attitude is going to end the Government up in court."
