Israel Folau claims Rugby Australia's termination of his contract over a social media post is an "unreasonable restraint of trade".
RA said Folau committed a "high-level" breach of its players' code of conduct.
Folau is seeking £5.6m (AU $10m) in compensation, an apology and a return to the national side.
A 26-page statement of claim has been filed this week by Folau's legal team to the Federal Circuit Court of Australia in which he denies breaching his £3.15m (AU $5.7m) contract.
"Mr Folau can no longer play rugby union at an international level (because he is only eligible to play for the Wallabies) or for an Australian team in the Super Rugby competition and (it) is therefore an unreasonable restraint of trade, contrary to public policy and void," the court document said.
The document claims the social media posts by the born-again Christian were "substantively unrelated to rugby union" and "the conduct occurred on Mr Folau's own time and not in the workplace".
Furthermore, it denies Folau is homophobic and "communicated the social media posts because of his belief that they represented the word of God and that he has a mission to and duty to spread what he believes to be the word of God".
The case will be heard in February 2020 unless it can be settled through court-directed mediation in December.
Folau, who signed a four-year deal with Sydney-based Super Rugby side the Waratahs in March, and had a contract with Rugby Australia until 2022, escaped punishment for similar anti-gay comments last year.
He has won 73 caps and was expected to play at this year's World Cup in Japan.
Rugby Australia declined to comment when approached by BBC Sport.