US authorities held him in solitary confinement and interrogated him for nearly two weeks before deporting him to Syria.
He was imprisoned for a year in Damascus, the Syrian capital, during which time he says he was tortured before finally being released and returned to Canada.
A Canadian commission eventually cleared him of any connections to "terrorist" organisations and concluded that he had been tortured.
He was awarded $10.5m in compensation.
Arar's suit before the Supreme Court questions whether "federal officials who conspired with Syrian officials to subject an individual in US custody to torture in Syria may be sued for damages".
David Cole, a lawyer for Arar, said: "The courts below ruled that federal officials cannot be sued for sending an innocent man to Syria to be tortured because the case would be too sensitive."
He said: "We hope the supreme court will reaffirm the role of checks and balances and afford Mr Arar his day in court."