Robert Croke now suffers from post-traumatic stress disorder and is unable to work on offshore rigs, said his lawyer, Timothy Young.
Croke and others were taken hostage at gunpoint in November 2010 after militants boarded the rig where they had been working.
Croke is currently not speaking about the incident, nor his decision to sue PPI Technology Services and an entity owned by Transocean, which bills itself as the world's largest offshore drilling company.
Young said his client has suffered more than the trauma of the incident, which included being hit in the foot by a ricochet bullet.
"Those jobs typically pay very, very well. They typically afford a wonderful lifestyle for Mr. Croke and others … [but] Mr. Croke cannot go back to offshore oil rigs now. He had some counselling after this. He still has nightmares," Young told CBC Radio's The Current.
"He was kept hostage for 10 days and a lot of this is stuff that he just doesn't get over, and trying to get back to an offshore environment is just something that he cannot do."
Not protected in unsafe workplace: lawsuit
The lawsuit argues that Croke was put at risk because PPI and Transocean did not do enough to protect him.
"We're alleging that his employer did not give him a safe place to work," said Young.
"Certainly, allowing militant groups to board an oil rig makes the rig very unsafe and dangerous for the employees on there."
Young said the militants appeared to have gained access by climbing a ladder that was not secure.
"We believe it was absolutely avoidable … These are not naive companies or unsophisticated companies," he said.
CBC contacted Croke at his home in Torbay for an interview on Monday. He denied the request on the advice of his lawyer.