East Timor is seeking the return of the documents relating to a controversial oil and gas treaty between the two countries, which East Timor wants cancelled.
It alleges Australia used an aid program as cover to bug East Timor's government offices so it could listen in on discussions about the treaty.
It says the treaty is invalid and ineffective because Australia secretly and unlawfully spied on East Timor, bugging its government offices and listening in to highly confidential discussions during the course of the negotiations.
Counsel for East Timor Sir Michael Wood told the court international law has been flouted by Australia's seizure of the documents.
"The court should indeed be prudent that national security and the enforcement of criminal law are not some magic wand that makes the rights and obligations of states and international law vanish," Mr Wood said.
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Australia's representatives will put forward their case to the court later today.
