Senior judges are being asked to decide whether relatives of soldiers killed in Iraq can pursue damages claims against the Government.
Three Court of Appeal judges are due to begin analysing compensation issues at a hearing in London.
The Master of the Rolls, Lord Neuberger, Lord Justice Moses and Lord Justice Rimer are scheduled to hear argument from lawyers representing relatives and the Ministry of Defence (MoD) over the next few days.
Lawyers say the judges' decision could also affect potential claims by injured servicemen and women.
In June 2011 High Court judge Mr Justice Owen said relatives could pursue claims on negligence grounds. But he blocked attempts to seek compensation under human rights legislation.
Lawyers representing both sides, relatives and the MoD, have lodged appeals.
Legal action was started following the deaths of a number of soldiers, Mr Justice Owen was told.
Corporal Stephen Allbutt, 35, of Sneyd Green, Stoke-on-Trent, Staffordshire, was killed in a "friendly fire" incident in March 2003, the judge heard. He died after A Challenger 2 tank was hit by another Challenger 2 tank. Soldiers Dan Twiddy, of Stamford in Lincolnshire, and Andy Julien, of Bolton, were badly hurt in the incident, Mr Justice Owen was told.
Private Phillip Hewett, 21, of Tamworth, Staffordshire, died in July 2005 after a Snatch Land Rover was blown up, the judge heard Similar explosions claimed the lives of Private Lee Ellis, 23, of Wythenshawe, Greater Manchester, in February 2006, and Lance Corporal Kirk Redpath, 22, of Romford, Essex, in August 2007, he was told.
Relatives argued that the MoD failed to provide armoured vehicles or equipment which could have saved lives. The MoD argued that decisions about battlefield equipment were for politicians and military commanders.