Barry George, who spent eight years in prison after being wrongly convicted of the murder of the TV presenter Jill Dando, has launched a test case bid to overturn a "defective" decision denying him compensation.
Mr George, 52, who was cleared after a retrial in 2008, is seeking a High Court ruling that could open the way for him to claim an award of up to £500,000.
His case is one of five test cases assembled for senior judges to decide who is now entitled to payments in "miscarriages of justice" cases following a landmark decision by the Supreme Court in May 2011.
Mr George's claim for damages for lost earnings and wrongful imprisonment was rejected by the Ministry of Justice on the grounds that he was not legally entitled to compensation.
That decision is being defended by Justice Secretary Chris Grayling in a three-day hearing at London's High Court.
Ian Glen QC, appearing for Mr George, is asking Mr Justice Beatson and Mr Justice Irwin to rule the decision to deny compensation "defective and contrary to natural justice" and a breach of the right to a fair trial under Article 6 of the European Convention on Human Rights.
Mr Glen contends there is no material to suggest that an "open-minded reconsideration" of Mr George's case has taken place at ministerial level following an original decision that was "flawed by illegality".
The proceedings follow the Supreme Court's redefinition of the legal meaning of what constitutes a "miscarriage of justice" after debating when compensation should be paid to people wrongly convicted of crime.
Miss Dando was shot dead outside her home in Fulham in April 1999.
After his conviction in 2001, Mr George, of Fulham, west London, was acquitted of killing the 37-year-old BBC presenter at the 2008 retrial.
The case was referred to by one of the panel of nine Supreme Court justices who gave the landmark miscarriage of justice ruling.
Lord Hope described how a particle of "firearms discharge" matching particles found in the cartridge case of the bullet which killed Miss Dando, had been found in a pocket of a coat worn by Mr George.
Evidence about the "firearms discharge" particle and its significance were called into question following a review and Mr George's conviction was quashed by the Court of Appeal in 2007 and the retrial ordered.
When found not guilty in 2008, the Crown Prosecution Service said he "had the right to be regarded as innocent".
In the Supreme Court ruling, the then president Lord Phillips said that the "mere quashing" of a conviction could not be a "trigger for compensation".
He said a "miscarriage of justice" occurred when a new fact "so undermined" prosecution evidence that no conviction could "possibly be based upon it".
He said the new "test" would not guarantee that all those entitled to compensation were "in fact innocent".
But it would ensure that when innocent defendants were convicted on discredited evidence they were not "precluded" from obtaining compensation because they could not prove their innocence beyond reasonable doubt.