Although Section 9 will remain in the SOEs Act, the Government is consulting over whether it should be extended to mixed-ownership-model companies and has said a more specific clause is more likely.
When Mr English told the iwi leaders Section 9 would stay but not stay in the same form, there was a loud "no" from many in the room.
Many leaders spoke against it - Ngapuhi runanga chairman Sonny Tau was scathing about the proposal of a different, more specific clause and the consultation process with Maori. He said the Maori Party had looked after National in Opposition, but when a Treaty issue arose "you abandon us".
Dr Sharples said the iwi leaders' stance would be a "wake-up call" for Mr Key.
The Government had been in talks with Maori for three years about fresh water rights, yet wanted to sell companies that were based on water.
"If there's not some link back to the Treaty on that, that makes a mockery of the talks that have been held."
He said a different clause was a possibility, but it would depend what it was.
Mr Key maintained a general Treaty clause, such as Section 9, could not work with the mixed-ownership model but a more specific clause was an option.
Such a clause could cover the exact rights which would be protected, or simply make it clear that the obligation was solely on the Crown - and not on the private shareholders or the company itself.
After meeting the leaders, Mr English said he was not surprised by the reaction.
"It's because 20 years ago it's [Section 9] the way Maori were able to stop the Crown from selling land and assets on which they have a claim. All those issues have been largely dealt with."
He said a final decision would be made after the consultation process. Submissions for that end on February 22.
The New Zealand Maori Council is lodging court action to stop asset sales, but the move is not supported by some iwi leaders.
Maori Council president Sir Graham Latimer said action was needed because Maori claims to a customary interest in water should first be determined by the Waitangi Tribunal and the courts.
However, four heavy hitters in Maoridom - Ngati Tuwharetoa's paramount chief Tumu te Heuheu, Ngapuhi's Sonny Tau, Tainui's Tuku Morgan and Haami Piripi - told the Herald the council didn't speak for their respective iwi.
HISTORY
* The State Owned Enterprises Act 1986 enabled the transfer of Crown assets and liabilities to new state-owned enterprises.
* Clause 9 of the act said: "Nothing in this law shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi," but the principles were not defined.
* On the strength of Clause 9, the NZ Maori Council challenged the disposal of assets, known as the Lands case.
* The Court of Appeal in its judgment on June 29, 1987 declared the transfer of assets to be unlawful because it did not have any system to determine if the transfer was inconsistent with the principle of the treaty.
* The Court of Appeal decision [of Lord Cooke] established the principle of "partnership" and his judgment began by saying: "This case is perhaps as important for the future of our country as any that has come before a NZ Court."
* As a result of the Lands case, the SOE legislation was amended to include clauses 27 A to D protecting Maori interests in land transferred to SOEs by the Crown.
