Washington said Iran's "support for international terrorism", including bombings and airline hijackings, should disqualify it from being heard at the International Court of Justice (ICJ) in The Hague.

Iran took Washington to the UN's top court in 2016 over a US Supreme Court ruling that the $2 billion (1.74 billion euros) should go to victims of attacks blamed on the Islamic republic.

Iran said the case breached a 1955 "Treaty of Amity" between Washington and Tehran signed before Iran's Islamic revolution.

Washington tore up that treaty last week after the ICJ in a separate case ordered the United States to ease sanctions reimposed on Tehran by US President Donald Trump after he pulled out of Iran's 2015 international nuclear deal.

"Iran comes to the court with unclean hands. Indeed, it is a remarkable show of bad faith," Richard Visek, a US State Department legal official, told the court.

"The actions at the root of this case centre on Iran's support for international terrorism... Iran's bad acts include supports for terrorist bombings, assassinations, kidnappings and airline hijackings," he said.

Visek also accused Iran's "most senior leaders" of the "encouragement and promotion of terrorism" and "violation of nuclear non-proliferation, ballistic missile and arms trafficking obligations".

Iran's use of the 1955 treaty to lodge the case was an "abuse of process", he added.

The ICJ was set up after World War II to rule on disputes between United Nations member states. Its rulings are binding but it has no power to enforce them.

In Washington, Secretary of State Mike Pompeo said: "We owe it to our fallen heroes, their families, and the victims of Iran's terrorist activities to vigorously defend against the Iranian regime's meritless claims this week in The Hague."

And "we will continue to fight against the scourge of Iran's terrorist activities in all venues and will continue to increase the pressure on this outlaw state," Pompeo said.

- 'Full reparations' -

At Monday's hearing, a 15-judge bench listened to US arguments over whether the ICJ can take up the case under its strict rules governing its procedure.

The terror attacks whose American victims were to be compensated under the April 2016 Supreme Court ruling included the 1983 bombing of a US Marine barracks in Beirut, in which 241 soldiers were killed, and the 1996 Khobar Towers bombing in Saudi Arabia. The decision affects a total of more than 1,000 Americans.

Iran angrily accused Washington of breaking the 1955 treaty -- even though it was signed at the time with the pro-US regime of the Shah -- and called for the United States "to make full reparations to Iran for the violation of its international legal obligations".

A decision by the ICJ's judges may not be made public for weeks or even months.

But Monday's showdown risks deepening the Trump administration's rift with international justice.

Last Wednesday, Trump's national security advisor John Bolton announced that Washington was not only leaving the amity treaty but also quitting the international accord relating to the UN top court's jurisdiction.

That followed Iran's shock victory last week when the ICJ ruled that the United States must lift sanctions against Tehran targeting humanitarian goods like food and medicine.

The step also came after the Palestinians went to the ICJ to challenge the US move of its Israel embassy to Jerusalem.

Trump last month at the United Nations virulently rejected the authority of the International Criminal Court -- a separate court based in The Hague that the US is not a member of -- over a probe into US forces in Afghanistan.