The New Zealand High Court has allowed German reinsurer R+V a stay of legal proceedings in a dispute with local government insurer Civic.

Civic is seeking $NZ35.62 million ($29.68 million) from R+V over earthquake claims, but the excess-of-loss reinsurer says the court should not judge the matter because the reinsurance contract has an arbitration clause.

Justice Alan MacKenzie says the Canterbury earthquakes led to large claims from councils insured with Civic, and while other reinsurers have paid, R+V has not.

He says for Civic to win a High Court judgement it must show that R+V has no defence, but some arguments over interpretation of the contract are not clear-cut.

Issues include reinstatement, reinsurance of risks insured for more than $NZ100 million ($83.3 million) and whether the cover applies to school, utility and below-ground assets.