President Johnson Toribiong did not identify who was in the Japanese delegation but said they were of "ministerial level" and they described the conservation group as "terrorists".
He said the Japanese had offered to send their own patrol vessel, adding: "I am weighing things now. I want to make sure I get potential diplomatic issues resolved."
The US-based Sea Shepherd Conservation Society has regularly clashed with Japanese whalers and this year forced them to cut short their annual Antarctic hunt.
A Memorandum of Understanding signed in Palau last month authorised Sea Shepherd to patrol the Palau marine area designated as the world?s first shark sanctuary.
Under the deal, "Sea Shepherd will, at its sole expense, send a vessel to patrol Palau?s territorial waters against illegal fishing activity", the conservation group said on its website.
Toribiong said although an agreement had been signed, it was not final until reviewed by the Attorney General's Office.
In 2009, Palau declared the world's first shark sanctuary, banning shark fishing in its exclusive economic zone, which covers almost 630,000 square kilometres (240,000 square miles) of the northern Pacific.
Published by AFP on April, 15, 2011