Martin Chamberlain QC, barrister for Transport for London, told the High Court on Monday that the issue in question was a difficult one and TFL was bringing the case in its capacity as a regulator of taxis in the capital.
"The object is to obtain an answer to a difficult legal question. Only a court can answer the question," he said.
TFL said in written arguments submitted to the court before the hearing that it considered Uber drivers who used the smartphone app had not broken the law.
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However, it acknowledged that the "contrary is arguable" and that the question is "an important one from the perspective of its own regulatory function".
Mr Chamberlain told the court that if it took a different view, TFL would ensure the law was enforced.
Rival taxi firm Addison Lee has previously claimed the High Court case could have a devastating effect on Uber's London business if it means Uber drivers are fined.
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Uber is facing a number of court cases in Europe and its growth has led to protests from taxi drivers worldwide.
In May, London drivers staged a demonstration protesting that the lack of clarity about rules favoured hailing apps.
In France, two Uber executives face criminal charges of organising taxi services through the company's low cost UberPop trial.
France's constitutional court is expected to rule on the legality of Uber's services shortly and the European Commission is looking into bans on the company's services in France and Germany.
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Transport for London has brought the High Court case against Uber, the Licensed Taxi Drivers Association and Licensed Private Hire Car Association.
Uber said: "We believe the Uber app on a partner-driver's phone is not a taximeter, and TfL — the regulator — shares this view. We are looking forward to getting binding clarity on this issue in the High Court. However, the outcome of the case would not affect Uber's licence in London, or its ability to operate here."
The hearing is due to last two days although a ruling is expected to be reserved.