A court injunction is being sought by Belfast City Council against the Chinese Consulate for defying enforcement action by continuing to build a wall without planning permission.
The diplomatic row escalated further yesterday as police were called when residents staged a protest and blocked a cement lorry from making a delivery.
Construction of a boundary wall at the leafy Malone Road site has continued despite a stop notice being served last week by council officials.
Residents have for weeks been complaining about the consulate erecting an "eyesore" metal boundary fence while constructing a more permanent wall.
Planners fear taking enforcement action will be rendered "pointless" by the consulate claiming diplomatic immunity.
The consulate has previously defended the works, saying it hopes to build a wall that both meets its security needs and respects the character of the surrounding neighbourhood.
Around 10 to 15 residents stood outside the consulate holding placards yesterday.
Brenda Gallagher accused the consulate of a "contemptuous attitude", describing their response to residents' concerns as "we're big and powerful and you're just little people".
Criticising the council's response to the dispute, she added: "They need to man up and show they mean business.
"Why is it up to the local residents to try and make these people respect the council stop notice?"
Martin McBurney, who also took part, said residents "blocked the road" as a cement lorry arrived.
"We weren't going to allow them to put through the delivery," he said.
The council served papers yesterday with the High Court to seek an urgent injunction, and a hearing was held remotely in the afternoon.
A council spokesman refused to comment on the court action.
Mr McBurney, who has been critical of the council's response, was less than hopeful about an injunction, saying, "I think to some degree it is optics on the part of the council."
However, Alliance councillor Emmet McDonough-Brown welcomed the legal proceedings.
"It is of course a shame that we have had to take this action. We would much rather they complied with the same rules citizens here have to abide by," he said.
"Their conduct continues to damage relations locally and risks undermining the reciprocal arrangements with our sister city in Shenyang."
SDLP councillor Gary McKeown said: "I would hope that this will prompt the consulate to see sense, and engage with council officers and their neighbours in a meaningful way to find a resolution.
"We need them to ultimately comply with planning regulations in a way which respects the historical and natural heritage of this area."
Mr McKeown, SDLP MP Claire Hanna and MLA Matthew O'Toole have sent a joint letter to British foreign secretary Dominic Raab urging him to intervene in the dispute.
The consulate is based at MacNeice House, a listed building which dates from 1889.
The area is a planning conservation zone in which development must meet stricter rules to be in-keeping with its existing architectural character.
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