The New Zealand government announced Friday it had approved for the second time a Chinese bid to buy 16 North Island dairy farms.

More than a year after Milk New Zealand Holding Ltd., a New Zealand subsidiary of Shanghai Pengxin, lodged an application for consent to buy the Crafar farms, the Overseas Investment Office ( OIO) has issued its second recommendation to the government to approve the purchase.

The OIO received the application on April 13 last year, but its first recommendation for approval was set aside after a court challenge.

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman said Friday they had approved the new recommendation of the OIO to buy the farms, which are in receivership.

"New Zealand has a transparent set of laws and regulations around overseas investment," Williamson said in a statement.

"Those rules recognize the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders' interests. They are applied evenly to all applications, regardless of where they are from.

"We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court."

The government had carefully considered the OIO's new recommendation and both the OIO and the ministers had sought legal advice on the recommendation.

"We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court's judgment."

The consent came with stringent conditions, said Coleman in the statement.

"These 27 conditions have been imposed to ensure Milk New Zealand's investment delivers substantial and identifiable benefits to New Zealand," Coleman said.

The conditions required Milk New Zealand to invest 16 million NZ dollars (13.02 million U.S. dollars) into the farms and to protect and enhance heritage sites.

"The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial," he said.

In February, the High Court in Wellington instructed the OIO to reconsider its recommendation to the government to approve the Shanghai Pengxin purchase after an earlier recommendation was challenged by a consortium opposed to foreign ownership.

Shanghai Pengxin's bid for the Crafar Farms had been challenged in the High Court by the Crafar Farms Independent Purchasers Group (CFIPG), comprising Maori trusts and New Zealand businessman Sir Michael Fay.

Shanghai Pengxin had its reported bid of 210 million NZ dollars accepted by the Crafar Farms receivers, ahead of a CFIPG offer of 171.5 million NZ dollars.

The CFIPG challenged the government's approval of the Shanghai Pengxin purchase on the grounds that the government had failed to properly assess the economic benefits of the bid under New Zealand 's Overseas Investment Act 2005.

In a judgment spanning the New Zealand-China Free Trade Agreement and a host of other issues, Justice Miller, at the High Court in Wellington, issued a ruling, setting aside the government consent.

But he also said that the Chinese-owned Milk New Zealand Holdings Limited, a subsidiary of Shanghai Pengxin Group Co. Limited, could still be approved as the purchaser of the farms when the bid was reconsidered by the Overseas Investment Office and the government.

The proposed purchase has sparked a heated controversy in New Zealand, with supporters saying New Zealand must be open to foreign investment and opponents arguing the country should not be selling its productive land to foreign owners.