Federal MP Clive Palmer has failed to have legal action against him and one of his companies struck out, and the matter will now go to trial.

Two Chinese companies suing federal MP Clive Palmer have a genuine dispute against him, a judge says.

Subsidiaries of Chinese government-owned company CITIC Pacific are suing Mr Palmer and his company Cosmo Developments over claims $12.167 million was misappropriated by the MP’s company Mineralogy.

CITIC Pacific subsidiaries Sino Iron and Korean Steel claim money deposited in an administrative fund and intended for the day-to-day running costs of a West Australian port was redirected to Cosmo Developments ($10 million) and Brisbane advertising firm Media Circus Network ($2.167 million).

Lawyers for Mr Palmer applied to strike out or permanently stay the Chinese companies’ claim for compensation, claiming their wasn’t reasonable grounds for the legal action.

But Justice David Jackson on Monday dismissed the application, meaning the matter will proceed to a three-day trial beginning on November 26.

Justice Jackson said one of the arguments used in the application was that the case was brought on a “feigned issue” and was really about “showing up” the defendants.

However, in his written judgment published on Monday, Justice Jackson rejected the argument.

“In my view, there is nothing fictitious about the causes of action pleased in the claim and the statement of claim filed by the plaintiffs in the present case,” he wrote.

The trial will determine whether payments made to Cosmo Developments and Media Circus Network formed a breach of trust and whether CITIC Pacific’s subsidiaries are owed compensation.

A CITIC spokesman said on Monday: “We welcome the court’s decision and now look forward to having this matter progress to trial.”