Tonga's Public Service Association says it is being sued for defamation by the Prime Minister, Lord Tu'ivakano.
The union group had claimed the Prime Minister acted illegally in authorising multi million dollar payments to the country's private satellite communications company, Tongasat, which is partly owned by the sister of King Tupou the 6th, Princess Pilolevu Tuita.
The PSA had called for Lord Tu'ivakano to resign over the matter.
The Prime Minister is demanding a payment of ten thousand pa'anga or about 5,300 US dollars for the claim made in a story run on Radio New Zealand International in March.
The PSA's general secretary Mele Amanaki says union still intends petitioning the King to ask him to sack the Prime Minister over the matter.