A court in New York is hearing a lawsuit brought by Vietnamese plaintiffs over the use of Agent Orange by the US during the Vietnam war.
Vietnam's Red Cross says 150,000 children were severely affected
The plaintiffs are seeking compensation from the US firms that manufactured the chemical for the military in the 1960s.
The alleged victims say the defoliant - which contains toxic dioxins - is responsible for health problems affecting millions of Vietnamese.
However the chemical companies say no such link has been proved.
The defendants - which include Dow Chemical and the Monsanto Corporation - also argue that the US government is responsible for how the chemical was used, not the manufacturers.
They maintain that US courts cannot punish corporations for carrying out the orders of a president exercising his powers as commander in chief.
The US justice department has urged the federal judge to dismiss the lawsuit.
In a brief filed in January, it said opening the courts to cases brought by former enemies would be a dangerous threat to presidential powers to wage war.
But Jonathan Moore, a lawyer representing the Vietnamese plaintiffs, said the defence was asserting "extreme positions" to prevent the case being heard.
"Are we going to allow the government to do whatever they want to do, on an assertion of executive privilege, or are there limits that even the US government... and these chemical companies must obey?" he said outside the New York court.
Between 1962 and 1971, large quantities of Agent Orange were sprayed across parts of Vietnam to deprive communist North Vietnamese forces of forest cover.
In 1984, several chemical companies paid $180m (£93m) to settle a lawsuit with US war veterans, who said that their health had been affected by exposure to the substance.
Agent Orange was named after the colour of its container. The active ingredient was a strain of dioxin that stripped the jungle bare.
In time, some contend, the dioxin spread to the food chain causing a proliferation of birth defects.
Some babies were born without eyes or arms, or were missing internal organs.
A group representing alleged Vietnamese victims says three million people were exposed to the chemical during the war, and at least one million suffer serious health problems today.