A protester holds up the Palestinian flag during a demonstration outside the court house in The Hague. AFP
The NGOs argued that Israel is breaking international law in Gaza and the West Bank, invoking, amongst others, the 1948 United Nations Genocide Convention set up in the wake of the Holocaust.
"Israel is guilty of genocide and apartheid" and "is using Dutch weapons to wage war", said Wout Albers, a lawyer representing the NGOs.
"Dutch weapons are killing children, every day, in Palestine, including my family," said Ahmed Abofoul, a legal advisor to Al Haq, one of the groups involved in the suit.
Opening the case at the court in The Hague, judge Sonja Hoekstra noted: "It is important to underline that the gravity of the situation in Gaza is not contested by the Dutch State, nor is the status of the West Bank."
"Today is about finding out what is legally in play and what can be expected of the State, if the State can be expected to do more, or act differently than it is currently acting," she added.
She acknowledged this was a "sensitive case", saying: "It's a whole legal debate."
The lawyer for the Dutch State, Reimer Veldhuis, said the Netherlands has been applying European laws in force for arms exports.
Veldhuis argued the case should be tossed out.
"It is unlikely that the minister responsible will grant an arms export licence to Israel that would contribute to the Israeli army's activities in Gaza or the West Bank," said Veldhuis.
The case comes one day after another court based in The Hague, the International Criminal Court, issued arrest warrants for Israel's prime minister and former defence minister.
The ICC said there were reasonable grounds to suspect Benjamin Netanyahu and Yoav Gallant of war crimes and crimes against humanity in Gaza.
The court also issued an arrest warrant for Hamas military chief Mohammed Deif, whom Israel claims it has killed. Hamas has denied these claims.
The ICC arrest warrant drew a furious reaction from Netanyahu but world leaders were split on the international court's decision.
The health ministry in Gaza said the death toll in more than 13 months of full-out Israeli war has reached 44,056 people.
The majority of those killed by Israel are women and children, according to ministry figures, which the United Nations considers reliable.
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