The Crown will vigourously defend its right to set up an ocean sanctuary around the Kermadec Islands, says the Environment Minister.
The Maori fisheries trust Te Ohu Kaimoana is taking legal action over the proposal, arguing the government has ignored the impact it will have on iwi fishing interests.
Plans for the Kermadec Ocean Sanctuary were announced by the Prime Minister at the United Nations General Assembly in September last year.
When in place the 620,000 square kilometre sanctuary would be one of the largest in the world.
The Sealord deal in 1992 gave fishing rights to Māori and guaranteed that the Crown would involve Māori in statutory decisions.
But Te Ohu Kaimoana chairperson Jamie Tuuta said the rights of the trust which were guaranteed under that settlement, had been ignored by the government in its development of the sanctuary proposal.
"And it goes a step further whereby those rights and interests which we believe are perpetual and intergenerational, will be extinguished through the sanctuary proposal.
"Now I think it is important to note as well that these rights were guaranteed under the fisheries settlement and are also development rights, so effectively our rights, customary, non-commercial and commercial fishing rights will be extinguished."
The paper that Environment Minister Nick Smith took to Cabinet to sign off the Kermadec proposal said nominal fishing quota was established in the area.
It said Te Ohu Kaimoana's share of the quota equated to 0.4 kilograms of catch and was so small that it got a zero allocation due to rounding.
The paper went on to say that the quota was essentially an administrative quirk.
Mr Smith said when the fisheries settlement was concluded in the 1990s, the Crown always maintained the right to establish marine reserves and he found Te Ohu Kaimoana's (TOKM) arguments theoretical.
"Given the fact that records show that no TOKM fishing has occurred in this area for more than a decade, Parliament is ultimately sovereign, but equally they are legally entitled to pursue their court case - the Crown will be vigourously defending its position."
Labour Party leader Andrew Little said he was stunned that legislation was already before Parliament to set up the sanctuary and now it turned out that only two iwi were consulted on the proposal.
"A right is a right and if there is right for fish collection amongst a group of iwi and Te Ohu Kaimoana either has those rights or exercises them, then you can't just barrel ahead and say 'oh well you haven't used it so we're just going to do what we like', you've still got to sit down and deal those affected parties.
"If that hasn't happened then that's a level of arrogance that I don't think we've seen for a long, long time."
Legislation putting in place the sanctuary passed its first reading this month with unanimous support and is now being considered by a Parliamentary select committee.