RNZI reports Bernard Sakora was arrested by members of the country's fraud and anti-corruption squad as he left his Port Moresby home on Monday morning.
After several hours of questioning, Mr Sakora was charged with one count of judicial corruption.
In a brief statement, the police said the charge was related to a payment Mr Sakora received from a lawyer at the centre of the scandal surrounding alleged illegal payments to the firm Paraka Lawyers.
It said Mr Sakora then failed to declare his interest, and presided over a number of Supreme Court cases involving Paraka Lawyers, including that involving an arrest warrant for the Prime Minister, Peter O'Neill.
Mr Sakora has denied the charges.