The Vietnamese claimants have been joined by American victims of Agent Orange, a toxic herbicide sprayed by the US military during the Vietnam War.
They are seeking compensation from more than 35 major US chemical giants for exposure they say caused genetic defects including cancer, deformities and organ dysfunction.
More than 30 companies including Dow Chemical Co and Monsanto Co are listed in the lawsuit.
'No evil intent'
US military aircraft dropped about 70 million litres of the defoliant on Vietnamese jungles between 1962 and 1971 in an effort to remove cover for communist forces.
|Vietnam says 3 million people suffer health |
effects of Agent Orange [GALLO/GETTY]
In court on Monday, lawyers for the chemical companies and the US government argued that there was no evil intent on the part of the chemical companies when Agent Orange was used to clear the land.
But the victims' lawyers say the case is really about the long term health affects which have been linked to the chemical.
They cited the convictions of the German makers of the gas Zyklon B, which was used in Nazi concentration camps during World War II.
Jonathan Moore, lawyer for the plaintiffs, said the companies producing Agent Orange did nothing despite knowing that the herbicide containing dioxin was harmful.
"They knew how it was going to be used and they had reason to believe the effect would be disastrous and they did it anyway," Moore told the court.
"We are now seeing years later the fruit of that terrible poisonous product."
Vietnam says at least three million people have suffered health problems from the chemical dioxin found in Agent Orange, with birth deformities at 10 times the rate of western countries.
Outside the New York court on Monday protesters carried banners reading: "Justice for the victims of corporate greed".
Among them was Nguyen Van Quy, 52, a former North Vietnamese soldier at the end stage of multiple cancers and who has two children with birth defects.
"I am here as a living evidence to tell the people in the court that dioxin really has a negative impact on human beings as well as the environment," said Quy.
"We need to tell the American citizens of the bad impact and consequences of Agent Orange to many generations in Vietnam."
US veterans of the Vietnam war were also at the rally.
One of them, Hugh Bruce, said it was important to ensure past mistakes were not repeated.
"The scientific evidence is in that this has created great problems and it continues to create great problems," he said.
"We owe it to the people of Vietnam and we owe it to our own veterans to take some action regarding this and be sure that this crime is never committed again."
A decision on the appeal is not expected for several months with lawyers saying that even if it is successful, it could be years before a compensation trial takes place.