The Ministry of Defence (MoD) has appealed against a ruling that a WWII merchant ship wreck should be considered for war grave designation.
James Varndell's daughters are leading the war grave campaign
Families of the men who went down with the SS Storaa, off the East Sussex coast in 1943, want it protected.
They were told it did not qualify as it was not "in military service", but a judge said the defence secretary's decision should be reconsidered.
Judgement was reserved when that ruling was fought at the High Court on Monday.
Rosemary Fogg, 73, and Valerie Ledgard, 65, the daughters of naval gunner James Varndell, were among those celebrating Mr Justice Newman's High Court order in December last year.
'Debt of gratitude'
Lawyers for the women, from Worthing in West Sussex, said the government was unlawfully failing to honour the memory of their father and 20 other merchant seamen.
The SS Storaa was torpedoed 10 miles off the coast of Hastings as it was transporting steel to a weapons factory in Cardiff, Wales.
But the MoD is maintaining that the wreck cannot be designated as a war grave, under the 1986 Protection of Military Remains Act, because it was a merchant navy vessel and therefore not "in military service".
A spokeswoman said: "We believe we have a vast debt of gratitude to all the merchant seafarers who helped the war effort... [but] we must closely adhere to the legislation as it is set out."
War grave protection imposes restrictions on the exploration and salvage of shipwrecks.