Supported by Amnesty, Human Rights Watch, Oxfam and others, the Palestinian rights association Al-Haq is seeking a court order to stop the government's export of UK-made components for Lockheed Martin F-35 fighter jets.
Israel has used the US warplanes to devastating effect in Gaza and the West Bank.
Outside the High Court in London, around 50 protesters waved Palestinian flags and placards with the words "Stop Arming Israel: Stop the genocide".
Inside the packed courtroom, Al-Haq lawyer Raza Husain said the case was "being heard against the backdrop of human calamity unfolding in Gaza, the extremity of which is difficult to convey in words."
He argued the government's trade department had unlawfully allowed exports of F-35 parts knowing there was a "clear risk" Israel would use them to commit violations of international law in Gaza.
Israel has repeatedly denied accusations of genocide.
The plane's refuelling probe, laser targeting system, tyres, rear fuselage, fan propulsion system and ejector seat are all made in Britain, according to Oxfam, and lawyers for Al-Haq have said the aircraft "could not keep flying without continuous supply of UK-made components."
Britain's defence ministry has previously said suspending F-35 licences would "undermine US confidence in the UK and NATO," while in a written submission a lawyer for the government said its actions were "consistent with the rules of international law."
It is not certain when a decision could be made following the four-day hearing, which marks the latest stage in a long-running legal battle.
- 'Loophole' -
Lawyers for the Global Action Legal Network (GLAN) have said they launched the case soon after Israel's assault on Gaza began, following the October 7, 2023 attack in Israel led by Palestinian militants from Hamas.
The lawyers said the UK government had decided in December 2023 and again in April and May 2024 to continue arms sales to Israel, before suspending licences in September 2024 for weapons assessed as being for military use by the Israeli army in Gaza.
The new Labour government suspended around 30 of 350 export licences following a review of Israel's compliance with international humanitarian law.
But the partial ban did not cover British-made parts for the advanced F-35 stealth fighter jets.
A UK government spokesperson told AFP it was "not currently possible to suspend licensing of F-35 components for use by Israel without prejudicing the entire global F-35 programme, due to its strategic role in NATO and wider implications for international peace and security".
"Within a couple of months of coming to office, we suspended relevant licences for the IDF (Israeli Defense Forces) that might be used to commit or facilitate serious violations of International Humanitarian Law in Gaza," they said.
But GLAN described the F-35 exemption as a "loophole" which allowed the components to reach Israel through a global pooling system.
Charlotte Andrews-Briscoe, a lawyer for GLAN, told a briefing last week the UK government had "expressly departed from its own domestic law in order to keep arming Israel", with F-35s being used to drop "multi-ton bombs on the people of Gaza".
The 2023 Hamas-led attack in southern Israel resulted in the deaths of 1,218 people, mostly civilians, according to an AFP tally based on official figures.
Israel's retaliatory offensive has killed at least 52,908 people in Gaza, mostly civilians, according to the Hamas-run territory's health ministry, whose figures the United Nations deems reliable.
"Under the Genocide Convention, the UK has a clear legal obligation to do everything within its power to prevent genocide," said Sacha Deshmukh, Amnesty International UK's chief executive.
"Yet the UK government continues to authorise the export of military equipment to Israel.
"This is a fundamental failure by the UK to fulfil its obligations."
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