Cape Town - New Zealand rugby are unwilling to let Crusaders flanker Pete Samu play for the Wallabies unless Australian rugby compensate them financially.
It prevents Samu from making his Test debut for the Wallabies in the upcoming series against Ireland this month
While neither national union has disclosed the nature of the deal, it is widely believed NZR wanted financial compensation before it would allow the 26-year-old a release from his Crusaders contract.
In a written statement, NZR head of professional rugby Chris Lendrum confirmed trans-Tasman bosses hadn't come to terms.
"We have attempted to resolve this matter in good faith but our proposals have not been accepted," Lendrum said.
"New Zealand Rugby remains open to resolving the issues."
Rugby Australia hasn't commented although Wallabies coach Michael Cheika has expressed his bemusement at the decision.
"I was a bit surprised to find out that there's a compensation issue around this," Cheika told Macquarie Sports Radio on Friday.
"I thought the rule that's been around, about players getting to play in a national week are preserved.
"The kid's very keen to play for Australia. I feel a bit for him too, it's a national call up, first time."