The Fiji Native Lands Trust Board, the NLTB, says the demand by a group of indigenous landowners for 120-thousand US dollars land rent for a water pipe is unreasonable.
The landowners are threatening to cut off the water supply to the Sonaisali Island Resort, just off the coast of Nadi.
They are also threatening to bar access to the resort.
A spokesperson for the NLTB, Nimilote Naivalumaira, says they want compensation for a pipeline that has run through their land for ten years.
Mr Naivalumaira says his officers have advised the landowners, cutting off the water supply to the resort is illegal.
"Our officers have been to the place and they have advised the landowners not to do what they intended. And we are currently looking their grievances they have placed with us."
Mr Naivalumaira says he doubts the landowners have the capacity to cut off the water.