* French judge tells hearing the 'stakes are big'
* Ban has held up sales of thousands of cars
* Toyota switches three models back to banned coolant (Adds detail on judicial procedure)
PARIS, Aug 23 France's top administrative court said it would decide on Tuesday whether to suspend a government ban on the sale of some of Daimler's cars in France in a row over coolant fluid.
France held up the sale of thousands of Daimler's Mercedes Benz cars after the German carmaker chose not to equip them with a new, more environmentally friendly coolant.
Daimler has asked the court for an injunction suspending the government's ban, arguing that the new refrigerant, known as R1234yf, poses a potential fire hazard.
"The stakes are big," Jacques-Henri Stahl, president of the tribunal judging the case in the Council of State, told lawyers for Daimler and the French government during a two-hour hearing on Friday. "We're at the heart of overlapping national and European issues."
A lawyer for Daimler, Denis Garreau, said the ban affected 60 percent of the company's sales in France.
"No other (EU) member state has taken the measures that France has taken," he said, calling it a "brutal decision" to suspend sales. "Daimler's position has been jeopardized in France."
The Council of State's presiding judge could temporarily suspend the government's ban on Tuesday, and might also order the government to resume assigning licence plates to Mercedes cars on a temporary basis.
There could then be a further, more drawn-out judicial procedure in which several Council of State judges would consider whether the ban should be permanently overruled.
France has argued that the ban is legally permissible under an EU law that protects the environment and public health.
Japanese carmaker Toyota also confirmed it had stopped using the flammable air-conditioning refrigerant in its cars sold in Europe, responding to public pressure in Germany.
"We have equipped three models with the old refrigerant in order to respect our customers' safety concerns because of the controversy in Germany," a spokesman for the carmaker said.
While Toyota remained "very confident" about the new coolant's safety, the company wanted to avoid being drawn into the debate, he said.
The group is no longer producing any vehicles for Europe with the R1234yf refrigerant manufactured by Honeywell and DuPont. Previously, its Toyota Prius Plus, Lexus GS and GT86 were all equipped with the chemical. (reporting by Alexandria Sage in Paris; additional reporting by Christiaan Hetzner in Frankfurt; writing by Christian Plumb; editing by Catherine Bremer and Tom Pfeiffer)