Any move to restrict judges' discretion over compensation payments should not be made in a "knee-jerk" fashion, Fianna Fáil has warned.
he main Opposition party is concerned that a referendum on how courts make awards would set a precedent.
On Saturday, the Irish Independent revealed Government plans to hold a referendum to override judges' discretion when it comes to compensation claims if the judiciary does not drastically reduce whiplash and soft injuries damages in less than two years.
Figures from the Personal Injuries Assessment Board (PIAB) show that the average award for a whiplash injury is just short of €20,000. This is around five times the average payout for whiplash in England and Wales.
The junior minister with responsibility for insurance, Michael D'Arcy, said that unless judges recalibrated compensation claims for whiplash injuries downwards, the Government would intervene.
"If the judges don't, then the matter will have to be reviewed by the Oireachtas.
"If a referendum is required, we will go with a referendum so that the Oireachtas does have the legal authority to set awards," he warned.
However, Fianna Fáil's spokesperson on business, Billy Kelleher, said: "If this Government intends on intervening in judicial discretion, it should firmly outline its case as to why it believes this is a suitable approach.
"This shouldn't be an ad hoc or knee-jerk move, considering the precedent it would set and the implications."
The Cork TD said upholding judicial independence was "crucially important".
He expressed concern at the idea of a referendum which he said would be designed "to directly interfere with the judiciary in our State".
Mr Kelleher added: "There are a number of recommendations put forward by the chairperson of the Personal Injuries Commission that should be examined and implemented foremost to alleviate the cost of claims and before a referendum should even be properly considered."