The case revolves around allegations made by Palace that Dowie made 'fraudulent misrepresentations' before leaving the club in May 2006.
Dowie had a clause in his contract that would trigger a £1m compensation payment from any club that poached his services.
Palace chairman Simon Jordan says he agreed to waive that clause as a gesture of goodwill on the understanding that Dowie wished to move back north to his family.
In fact, after leaving Palace, Dowie was swiftly unveiled as the new manager of neighbouring club Charlton.
Jordan argues he would never have allowed Dowie to leave his contract had he known he would be moving to The Valley.
Dowie's defence began in a written statement which described his departure from Selhurst Park as a 'clean break', which enabled Palace to dispense with his services without paying him substantial contractual entitlements.
He continues by stating that the case against him was "entirely without merit in fact or law and should never have been brought''.
Dowie further claims his resignation was in fact suggested by Jordan. It was "repeatedly suggested by Mr Jordan as part of a vulgar and abusive attack on him and the team'', the defence contends.
The statement continues: "Unfortunately for Mr Dowie, Mr Jordan has a particular dislike of Charlton Athletic FC, their deputy chairman and director Mr Richard Murray and their fans.''
"In reality, Mr Jordan's dislike of Charlton and a desire to damage that club, given that Mr Dowie became their team manager, was a particular motivation for Mr Jordan and Crystal Palace bringing this action.''
The case continues.