Kim Dotcom's former cloud storage service Megaupload is suing the government of Hong Kong in an effort to retrieve users' data.
The company was shut down in January 2012 at the same time Dotcom's home in Coatesville, Auckland was raided by police.
Megaupload's head office was based in Hong Kong and authorities there froze the company's assets at the request of the US Department of Justice (US DOJ), but Megaupload is yet to be charged with criminal proceedings.
"Over two years later, the US DOJ has yet to serve Megaupload or initiate substantive criminal proceedings against it, trapping Megaupload in a state of criminal limbo," Megaupload global litigation counsel Ira Rothken wrote on his website.
"During that time, the restraint order has prevented Megaupload from conducting business or paying bandwidth expenses needed to return cloud storage data to users."
Mr Rothken also argues the order to seize the company's assets was unlawful because the US hasn't explained how it plans to prosecute Megaupload.
"The US DOJ failed to explain how it intended to comply with the service of process requirements imposed by the Federal Rules of Criminal Procedure, which, as argued in Megaupload's application, are an essential prerequisite to initiating any criminal proceedings against Megaupload and cannot be satisfied for a corporation that has no physical presence or subsidiaries in the United States."
A Hong Kong High Court judge has ordered the Hong Kong Department of Justice to respond to Mr Rothken's allegations by June 4.