Fonterra's problems with market perceptions of its products widened on Friday when a Sri Lankan court stopped it from selling, distributing or advertising any of its milk there for two weeks.
A health sector trade union sought the court order, saying Fonterra had been misleading the public in Sri Lanka with its advertising, Reuters reports.
The National Health Services Union in Colombo said it sought the order because there were Fonterra milk products still in the market suspected to be contaminated with dicyandiamide (DCD) despite an order from the health ministry that they be recalled.
DCD is a nitrate inhibitor applied to pastures to improve the uptake of nitrogen-based fertilisers.
"An enjoining order was issued preventing Fonterra...from (wholesaling), selling and distributing and or selling for agents of all brands of Fonterra products for a period of two weeks," Upul Jayasuriya, who appeared on behalf of National Health Services (Trade) Union, told Reuters. The court had also barred advertising by Fonterra's milk products, Jayasuriya said.
An official from Fonterra Brands Sri Lanka declined to comment on the court order, saying it had not yet received it.
The Health Ministry had said a recent local test by Sri Lanka's Industrial Technology Institute discovered DCD in some Fonterra brand milk powders and had directed the world's largest dairy exporter to recall the products.
Fonterra has disputed the accuracy of the local testing.
But on Thursday, Leon Clement, managing director of Fonterra Brands Sri Lanka, told Reuters that the company has recalled two batches of Anchor-branded product as the result of the directive from the Ministry of Health and the recall has now been completed. About 40 tonnes was involved.
Other international reaction to Fonterra's separate crisis over whey contamination continues to grow, according to overseas reports.
A Vietnamese dairy product firm, Abbott Vietnam, has recalled another 4300 cans of infant formula following continuing concern over whey concentrate from New Zealand tainted with botulism-causing spores.
The company says it has received information from the New Zealand Ministry for Primary Industries that the cans in question, though not made with the contaminated whey, could have been tainted since they were packed with the same equipment.
Indonesia has decided to ban the importation of all infant formula products through its Batam port as a precautionary measure, while it investigates whether products containing whey protein concentrate have entered the market.
Bangladesh has also beefed up checks at its main seaport to control entry of Fonterra product, although the Government there doesn't know yet whether whether any such products are imported.
Meanwhile, the Sri Lankan Government has appointed a sub-committee to investigate the contamination.
It says it may consider legal action against the company if any wrongdoing is found.
Fonterra also has a widening problem with overseas perceptions of its botulism bungle, in which it produced whey concentrate contaminated with the organism which can cause the disease.