Manus Provincial Police Commander, Chief Inspector David Yapu, said the refugee was armed with a small knife when he tried to attack a soldier where a fight took place at 4pm.
He said other soldiers came to their comrade’s assistance while bystanders came to help the refugee.
Police arrived at the scene and dispersed the crowd, containing what could have been a nasty situation.
Yapu said no one was seriously hurt or injured but warned people to respect the rights and freedom of refugees moving around in the town.
In a separate incident that night, a fire was set to one of the rooms at the refugee camp that houses 70 men at ward one, around 10pm.
Quick action by securities prevented the fire from spreading to the whole building.
A non-refugee has been identified as a suspect.
Police continue their investigations.