The High Court is being asked to decide a "narrow but difficult" point of law with important implications for the future of controversial minicab-hailing app Uber.
Transport for London and Uber are seeking clarification as to whether smartphones, used by some private hire drivers, can lawfully be used to calculate fares.
The crucial issue is whether the phones, which use GPS technology and connect to external servers to carry out calculations, are taximeters, which are prohibited in private hire vehicles in London.
Martin Chamberlain QC, appearing for TfL, told a judge the regulatory body had taken the view from the outset that the smartphone app was not unlawful.
But, because the contrary view was "arguable" and the narrow point of law involved "difficult", TfL had come to London's High Court to seek clarification.
Mr Chamberlain told Mr Justice Ouseley: "TfL brings these proceedings in its capacity as the regulating authority for both private hire and (black cab) taxis in London.
"The object is simply to attain the answer to a difficult legal question that only the court can answer authoritatively."
The QC added: "TfL has formed a view. If the court takes a different view TfL intends to ensure the law as declared by this court is properly enforced."
The two-day hearing will include submissions from Uber London Ltd and the main trade bodies - the Licensed Taxi Drivers' Association and Licensed Private Hire Car Association.
Before today's hearing Leon Daniels, TfL's managing director of surface transport, referred to the technological changes now taking place and said: "London is one of the world's great technology centres - and we celebrate that.
"In order to move with these changes, whilst still ensuring the safest and best possible journeys for passengers, it is in everyone's interest to bring legal clarity to the issue of taximeters and to review the current regulations that were written well before smartphones were invented."
Black cab drivers - several of whom were in court today - have demonstrated in the capital against TfL's handling of regulation for private hire car companies, in particular Uber, and suggested that the ride-sharing taxi app puts public safety at risk.
Uber itself has hit out against proposals to tighten private hire regulation following TfL's launching of a consultation on a series of measures that would affect minicab drivers in the capital.
They include the introduction of an interval of at least five minutes between a booking and the start of a journey, to allow drivers to plan an appropriate route.
Other proposals involve a requirement for drivers to pass an English language test and a map reading assessment, while firms could have to operate a fixed landline telephone and accept bookings up to seven days in advance.
Uber is urging its customers to sign a petition as it warned the plans "will mean an end to the Uber you know and love today".
Government figures show the number of minicabs in the capital has risen by over a quarter (26%) in the past two years, to 62,800.
London mayor Boris Johnson said he is seeking legislation to give TfL the power to cap the number of licensed minicab drivers.