The tiny Caribbean island of Bonaire's football federation challenged FIFA at sport's highest court on Thursday (AEST) seeking membership of the world governing body.
The Court of Arbitration for Sport said a video-conference hearing was held for Bonaire to appeal against FIFA's decision last September to reject a membership application.
The court did not set a target date for a verdict.
Victory in the appeal would set Bonaire on course to become FIFA's 212th member federation, which would give it access to funding of US$6 million ($A8.2m) spread over each four-year World Cup period. Smaller federations can get $1m ($A1.4m) more for travel and equipment costs.
FIFA declined to comment on the case.
Bonaire, with a population of 20,000 people, was part of the Netherlands Antilles that was dissolved 10 years ago.
It is now formally part of the Netherlands with the status of a municipality.
The island's national federation joined regional confederation CONCACAF in 2013, which fulfills one of the requirements of applying for FIFA membership.
However, FIFA's legal statutes also say that only a body "responsible for organising and supervising football in all of its forms in its country may become a member association".
The Dutch federation has promoted the development of Bonaire football with FIFA.
Bonaire's national team plays in CONCACAF's Nations League competition, and placed second behind the Bahamas in a three-team group last year.
Home games were played in nearby Curacao.
Curacao and another of Bonaire's neighbors, Aruba, also have historic Dutch ties and are members of FIFA. They are set to begin their 2022 World Cup qualifying games in March.
FIFA's most recent new members, Kosovo and Gibraltar, joined in 2016.
Gibraltar gained membership of European confederation UEFA and FIFA only after taking legal cases to CAS.