Nauru has issued a hard hitting dismissal of New Zealand's claims about the state of its judicial sector, saying its suspension of aid funding is misguided.
In a statement it further accuses New Zealand of attempting to undermine the island's national sovereignty and interfering in its domestic affairs.
The Nauru Justice Minister, David Adeang, claims the move is based on misinformation from Opposition MP Roland Kun and his wife, who he says have been lobbying the New Zealand Government.
He says any suggestion the Nauru justice system is not independent or that the rule of law is not being upheld is completely wrong and offensive to the country's judges.
Mr Adeang says his government implicitly respects the rule of law and the separation of powers, but stands by its right to uphold the law, which includes the current investigation of Mr Kun for his alleged part in instigating what the government deemed a riot at Parliament House in June.
Mr Adeang says since these investigations are continuing New Zealand is trying to undermine Nauru's sovereignty and influence a criminal investigation.
But Nauru's former chief justice, Australian Geoffrey Eames, says the island's government cannot ignore New Zealand's decision to suspend aid to its justice sector.
New Zealand pulled the assistance on Thursday, saying it had given Nauru more than a year to restore international confidence after the removal of the resident magistrate, the then chief justice Eames, the police commissioner and others.
But he says this had not happened.
New Zealand has also been concerned at human rights abuses and the suspension of most of Nauru's MPs since the middle of last year.
Mr Eames says all members of the Nauru Government will have to look seriously at this.
"And say 'are we prepared to be regarded internationally as a government which acted in such breach of the rule of law that a funding body in such good standing as the New Zealand Government - what occurred was so serious that they had to take this step.' "
Australia has been called on to take a more responsible role in the Pacific in the wake of New Zealand suspending the Nauru aid..
Australia provides tens of millions of dollars to Nauru to support its controversial asylum seeker camps on the island.
Australian Greens Senator, Sarah Hanson-Young, says Australia has been silent on corruption and the disarray in the justice sector, and it needs to be clearer with Nauru about its expectations for a fairer legal system.
"This is not the type of democracy that we want to see happening in the Pacific region and Australia needs to take a/ some responsibility and b/ do what we can to get Nauru back on track."