Last month, Iran filed a complaint with the Hague-based tribunal, also known as the World Court, asking the principal judicial organ of the United Nations to order the US to lift its recently re-imposed sanctions on the Islamic Republic.
Tehran has called on the ICJ to order the immediate lifting of the sanctions, and demanded compensation for damages incurred in their wake, Presstv reported.
Iran believes that the re-imposed American sanctions against Iran violate the terms of a 1955 friendship treaty between the two countries.
But US State Department Legal Adviser Jennifer Newstead argued on Tuesday, the second day of oral arguments in the case that Iran's appeal based on the 1955 Treaty of Amity, was a legal dodge.
"Iran is endeavoring to use the procedures of the Treaty of Amity to enforce rights that it claims under an entirely different (agreement) that specifically excludes judicial remedies," she said.
She argued that the disagreements between the United States and Iran should be resolved through diplomacy and not by the court.
Newstead further told the ICJ in The Hague that it "lacks prima facie jurisdiction to hear Iran's claims."
The US re-imposition of sanction against Iran came after US President Donald Trump pulled out of the 2015 nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA) and set forth 12 new demands in order for the US to agree to a new nuclear deal with Tehran.
America’s European allies have protested against the move, but they are likely to adhere to the sanctions under the US pressure.
"This case is entirely about an attempt to compel the US by order of this court to resume" the 2015 nuclear deal, Newstead said.
The oral arguments, essentially a request by Iran for a provisional ruling, will last for four days, with a decision to follow within a month.
The ICJ was set up in 1946 to resolve international disputes. Its rulings are binding but on rare occasions they have been ignored by certain countries, chiefly the United States.