Both sides are said to have reached an agreement over a fee for the 24-year-old, with Metz claiming that the player had successfully completed a medical at Upton Park.
However, according to a statement released by the French club, Sam Allardyce's side switched from wanting a permanent transfer to a loan deal with the option to buy.
The statement read: "The English club unilaterally decided to propose a loan deal with an option to purchase instead of a permanent deal, which does not correspond to FC Metz's expectations and contradicts all the terms that had been agreed last week between the two clubs.
"FC Metz regret this clear lack of respect, which is unacceptable, from West Ham towards FC Metz and also the player.
"As a result, FC Metz reserve the right to approach the international sport court and assert their rights and defender their interests. FC Metz had released Diafra Sakho from his professional duties during matchday 1 of the Ligue 1 championship by giving him leave to take a medical in England to complete the last stage of the deal."
Senegalese striker Sakho was named best player in the French Ligue 2 last season.