It would be "impossible" to apply the European Convention on Human Rights to British troops in Iraq, the High Court heard on Thursday.
Kifah Al-Mutari was arrested along with other hotel workers
The court is hearing a challenge over the deaths of six Iraqis allegedly at the hands of British soldiers.
The families are seeking a ruling forcing a "full and independent" inquiry into the deaths.
Government QC Christopher Greenwood said applying the convention would mean "war as it has never been fought".
But that did not mean there was a legal black hole operating in the country, he said.
Judges heard on Wednesday that British troops had killed a 26-year-old hotel worker by repeatedly beating him on the neck, chest and genital areas.
On Thursday, Rabinder Singh QC said the failure to adequately investigate had breached the Iraqis' human rights.
The six test cases also include the shootings of five Iraqi civilians.
Four of the victims were either at home, walking in the street or driving when they were shot, allegedly by soldiers from the King's Own Regiment.
The deaths of hotel worker Baha Mousa and an Iraqi police commissioner shot while on his way
to a judge's house were allegedly caused by soldiers from the Queen's Lancashire Regiment.
Mr Singh said that in five of the cases investigations had been ruled out by the commanding officer or those in his command chain.
"The troubling factor, among others, is there is often reference to how investigations would be futile.
"There were no autopsies, no statements from external witnesses."
The sixth case relating to the death of Mr Mousa "illustrates how different it can be", Mr Singh said.
"We are told about forensics, photos and the bringing in of pathologists."
Two High Court judges must decide whether the Human Rights Act 1998 applies to the British troops in south-east Iraq during the period of occupation and, if so, whether there should be an independent inquiry to investigate the alleged post-war deaths of a total of 37 Iraqi civilians.
Mr Singh told the judges European human rights laws, which protect the right to life and freedom from torture or inhuman and degrading treatment, applied to troops in Iraq.
But Professor Greenwood argued the convention would only extend outside a European state's territory when it has effective control of that territory.
"The UK has never had effective control of south-eastern Iraq," he told the court.
In a statement to the court on Wednesday Kifah Taha al-Mutari, arrested at the same time as Mr Mousa and five other hotel workers, alleged that detainees at a British military base were beaten.
He claimed the detainees at the base, Darul Dhyafa, were beaten on the neck, chest and genital areas, hooded, deprived of sleep, and had freezing water poured over them.
A witness statement by Mr Mousa's father, Daoud Mousa, talked of seeing his son's body covered in blood and bruises.
"I literally could not bear to look at him," he said.