Sharon's suit against Time is second major test for US press

In a courtroom six floors above the one in which Gen. William Westmoreland's suit against CBS is being tried, former Israeli Defense Minister Ariel Sharon is taking on Time Inc. in a $50 million libel suit.

Opening statements in the Sharon case were heard Tuesday and Wednesday, and Mr. Sharon (now minister of industry and commerce in the Israeli government) is expected to be the first witness to testify.

Milton S. Gould, lawyer for Sharon, charged that an article in Time magazine last year suggested that Sharon had ''discussed, conspired, instigated, promoted . . . mass murder'' of Palestinians by Christian Phalangists in Lebanon's Sabra and Shatila refugee camps in 1982. At that time, Israeli defense forces were in Beirut as part of a military operation to root out members of the Palestinian Liberation Organization.

After the evacuation of most of the Palestinian Liberation Organization (PLO) in Beirut, the Phalangists were sent into the camps to round up any remaining members. This was in the immediate aftermath of the bombing death of Bashir Gemayal, a Phalangist leader scheduled to be sworn in as Lebanon's president.

In Time coverage of an Israeli commission report said that Sharon bore ''indirect responsibility'' for what happened in the Beirut camps, the magazine reported that a section of the report had not been released, and that it contained details about a Sharon visit with the Gemayal family after the assassination of Bashir. At that meeting, Time said, Sharon reportedly ''discussed with the Gemayels the need for the Phalangists to take revenge. .''

In his country, Mr. Gould said, Sharon is ''a minister, a general, a soldier, a farmer, and a hero. . . .'' The Time article, which Gould said includes ''contrived'' statements and a lie, ''shattered'' Sharon's reputation.

Gould also charged that Time reporter David Halevy, an Israeli citizen and soldier, had ''a history of inexcusably shoddy reporting,'' and a bias against Sharon.

Time lawyer Thomas D. Barr of Cravath, Swaine & Moore, (the same law firm that is defending CBS downstairs), told the jury that all the magazine employees involved in the story - including researchers, reporters, and writers - had extensive experience in reporting on the Middle East.

He began by showing slides of press articles on Sharon, showing what sort of reputation Sharon had before, during, and after the Israeli operation in Lebanon , and what the point of view of the reporter might be.

Both lawyers gave a short chronology of the events leading to the tragedy at Sabra and Shatila, and each was accented with a different emphasis and interpretation of what happened.

Gould characterized the Phalangists at the time of the invasion as having what seemed to be a very disciplined, highly respected leadership, and that random killings and atrocities appeared to be ''things of the past.'' Mr. Barr suggested that some of those ''gentlemen soldiers'' Gould talked about were actually ''a gang of murderers, rapists, who destroyed as a way of life.''

During the opening statements, Sharon sat in the audience with his wife, son, and others. Halevy sat at the table with the Times attorneys.

US District Court Judge Abraham D. Sofaer is presiding over the case. He reminded the jurors that Sharon has the burden of proving that he was defamed, that what was said was false, and that the magazine acted in ''actual malice'' by knowing the information was false or by ''recklessly disregarding'' the truth.

Time lawyers have said that the case is an attempt by a foreign politician ''to justify his conduct of war'' in interest of his political future.

Sharon has been mentioned as a potential prime minister. Observers also point out that he has managed a credible political comeback since the cries for his resignation at the time the Israeli commission released their report on the events in Beirut.