The Government is unlikely to meet its deadline for the first energy company share float now it faces a prolonged legal battle with the Maori Council, Labour says.
Cabinet on Tuesday postponed plans to make an order in council which would have removed Mighty River Power from the State-Owned Enterprises Act after the Maori Council began High Court proceedings seeking a judicial review of the asset sales policy.
The order in council would have been the first step to open Mighty River Power to partial privatisation, and the Government plans to float 49 percent of the company's shares between March and June next year.
After the cabinet announcement, Justice Ronald Young set a substantive hearing on the case for November 26.
The Government says it has a very strong case but acknowledges it could end up fighting the council in the Supreme Court.
Prime Minister John Key says he is sticking with the March to June deadline but Labour's state-owned enterprises spokesman, Clayton Cosgrove, doesn't think the Government will make it.
"The sales process has been shambles after shambles," he said.
"This delay means it's unlikely we will have a decision until after Christmas, which makes their timeline of getting a sale in March extremely unlikely."
The council is going to argue that the Government will be acting illegally if it partially privatises Mighty River Power before Maori water rights are settled.
Mr Key says the Government believes it has met all its obligations under the Treaty of Waitangi, and he expects the courts will "understand the urgency" of the situation.