He is accused of committing war crimes against the rebels who overthrew his father last year.
His ICC lawyers are expected to argue he will not receive a fair trial in Libya, where he is currently held.
But the Libyan authorities say he should be tried in the country where he is accused of committing crimes.
At the beginning of the two-day hearing, Libyan lawyer Ahmed al-Jehani called for the international community to "be patient", telling ICC judges the Libyan authorities "needed time" to organise a fair trial for Saif Gaddafi.
Mr Jehani told the judges they had not ruled out some level of ICC involvement.
This is the first time the ICC defence team has come face to face with the Libyan lawyers in court, says the BBC's Anna Holligan in The Hague.
The Libyan authorities have made no secret of the fact that they have absolutely no intention of handing Saif Gaddafi over to the ICC, our correspondent says.
If they do want to play by the rules and win the right to try Saif Gaddafi at home, they must convince the judges they can do the job and that Mr Gaddafi will face a fair hearing at home.
Continue reading the main story Born 1972Stylish, English-speaking bachelorTrained engineerLong seen as likely successor to his father - suggestions he played downPreviously seen as reformist face of his father's regimePlayed key role in rapprochement with the West from 2000-2011Accused of organising brutal crackdown on opposition protests in FebruaryThey must show they are conducting their own investigations, and are willing to prosecute Mr Gaddafi for the same alleged crimes that are listed on the ICC's arrest warrant.One of the lawyers representing Libya, Philippe Sands, has confirmed Mr Gaddafi is still being held by the Zintan Brigade in Libya, adding he will be transferred to a secure detention facility in Tripoli before trial.
Tug of warThe pre-trial session is part of an ongoing battle between Libya and the ICC over where the son of the former Libyan leader should face justice, our correspondent adds.
Melinda Taylor, the ICC's defence lawyer who was arrested while visiting Mr Gaddafi, will be presenting her findings during the hearing.
She is expected to tell the judges she does not believe her client will receive a fair trial in Libya.
Mr Gaddafi has been held in the western mountain town of Zintan for almost a year.
During that time, the Libyan authorities have repeatedly rejected requests to hand him over for trial in The Hague.
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