Folau's lawyer, Stuart Wood QC, faced the Federal Circuit Court in Melbourne on Tuesday for a directions hearing, during which Chief Judge Will Alstergren encouraged the parties to settle their dispute through mediation on December 13.
If mediation fails, Folau will fight Rugby Australia and the NSW Waratahs at a three-to-five-day trial from February 4 next year.
Folau wants an apology, $A10 million in damages and his contracted reinstated by his former employers, claiming he was sacked on religious grounds following his April Instagram post about gay people going to hell unless they repented.
Folau was not present at Tuesday's hearing, which was also live-streamed to Sydney.
Lawyers for Rugby Australia indicated they may apply for the case to be heard by the Federal Court of Australia rather than the Federal Circuit Court, and may also apply to have the case transferred to Sydney.
Mr Wood criticised the move, saying it was an attempt to delay proceedings and that he wanted Judge Alstergren to be aware of "what's going on in the background".
The allegation was denied by Rugby Australia lawyer Adam Hochroth.
If mediation is unsuccessful, the parties will return to court on December 17 for a directions hearing ahead of trial.