New Zealand dairy group Fonterra has described as "extraordinary" the decision by the European Commission to suspend the issuing of all import licences for New Zealand butter imported under quota into the EU.

The commission had announced that it would suspend the issuing of licences for an interim period while it considers the implications of a European Court of Justice (ECJ) ruling issued last Tuesday which declared that the EU regulation setting the rules for dairy imports was invalid on technical grounds.

However, Fonterra chairman Henry van der Heyden said he considered suspending licenses to be an "extraordinary step".

"The court has said that the European Commission has made a mistake in drafting their internal rules around the dairy trade," van der Heyden said. "The commission now needs to do whatever is required to fix that. But it is ridiculous for the commission to react by stopping all trade while they decide what to do next."

Van der Heyden said the ECJ ruling had said nothing about stopping trade but on the contrary implied the commission had "a strong obligation to ensure business continues uninterrupted".

"We have long-standing contracts and obligations with key European customers who rely on our product to serve European consumers," van der Heyden continued. "While we are confident we have sufficient product on hand to meet our customers' needs in the short term, any prolonged delay would compromise our ability to carry on our business with them."