Sky City: Future Governments not bound by current deal - lawyer

SkyCity has been granted 230 extra machines and 52 new gaming tables. Photo / Supplied

The Government's pokies for convention centre deal cannot bind future governments to compensate SkyCity if the deal is revoked, leading constitutional lawyer Stephen Franks says.

Mr Franks' law firm Franks & Ogilvie was asked by the Green Party to advise on the constitutional implications of the deal.

In his report, Mr Franks said it was not possible for SkyCity and the current Government "to exclude the ability of the NZ Parliament to revoke the contract in whole or in part".

He also said the current Government could not prevent a future government from acting to "negate Government liability to SkyCity including under the compensation provisions".

That said, Mr Franks observed the developing role of international arbitration may eventually limit the ability of New Zealand's Parliament to exercise its sovereign power by revoking the SkyCity compensation deal.

If SkyCity was deprived of compensation for an early end to the Gambling Act concessions it will receive under the deal with National, "certain overseas investors in SkyCity may have arbitrated rights to compensation under bilateral investment treaties and free trade agreements".

Mr Franks goes on to say that should a future Parliament make changes to the Gambling Act which effectively undermined the deal with SkyCity, its liability would probably not extend to a penalty for the law change "but it would permit compensation for genuine losses suffered from investment in reliance on the state's contract."

Mr Franks' analysis also suggested the preliminary deal or "heads of agreement" signed by the Government and SkyCity last month "exhibits an approach to procurement that skirts important constitutional safeguards."

The Government was in effect selling dispensations from the Gambling Act to SkyCity which were not available to others in return for the convention centre.

"The ability to "purchase" a dispensation from regulation sits uncomfortably with the rule of law", Mr Franks said.