The Home Secretary has appealed against a High Court ruling that gave nine Afghan hijackers discretionary leave to stay in the UK.
Nine Afghans hijacked a plane and brought it to the UK
A lawyer for John Reid argued in the Court of Appeal that he should be able to limit the Afghans' ability to work and enjoy other freedoms in the UK.
Although the Afghans were refused asylum, they could not be deported because of their human rights.
They hijacked a flight in Afghanistan and forced it to Stansted in 2000.
Successive ministers have tried to limit their rights.
In November 2005, the then Home Secretary Charles Clarke granted the Afghans "temporary admission".
This meant the nine would have restrictions placed on them including not being able to work or obtain travel documents and being told where to live.
But in May this year, Mr Justice Sullivan ruled that the Afghans were allowed "discretionary leave" permitting them to work and possibly be entitled to state benefits, despite not receiving full refugee status.
The government described the decision as "an abuse of common sense".
In court, Robert Jay QC, representing Mr Reid, said the Home Secretary should have the power to grant only temporary admission to failed asylum seekers who are only allowed to stay in the UK due to their human rights.
The judges reserved judgment after a day-long hearing.
The nine - Reshad Ahmadi, Abdul Shohab, Abdul Ghayur, Taimur Shah, Nazzamuddin Mohammidy, Mohammed Kazin, Ali Safi, Mohammed Safi and Mohammed Showaib - say they are educated people who want to contribute to British society.