Convicted to a life sentence in December 1994 for the 1975 murder of three French police officers, Carlos claims his years of solitary confinement constitute "inhuman and degrading treatment," banned by the European Convention on Human Rights.
Carlos served the first eight years of his term in a 6.84 sq metre cell in France's Sante prison, where he was deprived of all contact with fellow inmates and was allowed only a daily two-hour walk.
Isolation is a "prison within a prison," Carlos' lawyer Francis Vuillemin said on Wednesday.
"In the Middle Ages, we had dungeons where the keys were thrown away. In 2006, we have, in the same country, solitary confinement," he said.
Carlos was again segregated in another jail for part of 2004 and 2005, and has recently been transferred to the Clairvaux prison, where he is part of the general inmate population.
The European Court of Human Rights already ruled last January on the same complaint, rejecting the "inhuman treatment" charge but agreeing unanimously that prison officials had not followed correct procedure in prolonging his solitary confinement.
The proceeding on Wednesday was an appeal hearing by the Court's Grand Chamber.
Carlos rose to infamy 30 years ago when he took 11 ministers hostage from the powerful Organisation of Petroleum Exporting Countries (Opec) oil cartel.
His commando group burst into the conference room where the Opec ministers and their staff were meeting in Vienna, killing a Libyan delegate, an Austrian policeman, and an Iraqi bodyguard.
Vuillemin: Isolation is a
'prison within a prison'
Saying he was acting for the Arm of the Arab Revolution, a previously unknown group, Carlos demanded the broadcast of a text condemning Israel, the Palestine Liberation Organisation, the oil monarchies of the Gulf and Anwar Sadat, then Egyptian president.
The occupation of the Opec headquarters went on until the following morning, when Carlos's team took a DC-9 plane supplied by Austrian authorities to fly towards Algiers with 40 hostages.
Carlos was finally captured in Sudan in August 1994 by French secret service agents.