The cladding was advertised as safe for use in residential, commercial and public buildings by German manufacturer 3A Composites and its Australian distributor Halifax Vogal Group (HVG), a court heard on Monday.
However the components were claimed to be "wholly unsuitable" for that purpose, as they were made of flammable material which could accelerate the spread of fire throughout a building.
Combustible cladding hit the public eye after the July 2017 fire at the 24-storey Grenfell Tower in London where 72 people died.
Footage of that fire played to the Federal Court on Monday showing flames rising all the way up to the roof of the building while molten debris dripped onto the street below.
Certain types of cladding have been banned in Australia, meaning that owners corporations were suddenly made to spend hundreds of thousands of dollars replacing the dangerous material.
Other types of cladding, while not banned, have resulted in insurance premiums skyrocketing as insurers became reluctant to cover buildings with the material installed, the court was told on Monday.
The class action claims the building components were not of merchantable quality and that 3A and HVG made misleading representations when it came to marketing the material to architects and builders in Australia.
It is seeking damages and compensation.
3A has denied it was responsible for promoting the products.
Both 3A and HVG have said the components were incorrectly used due to architectural plans which either did not install the parts properly or failed to properly assess whether the building would remain fire-safe with the cladding installed.
The hearing before Justice Stewart Anderson is expected to last for 40 days.
