The US justices appeared to be divided on the case which has dragged through the courts for the past two decades.

Among the issues to be weighed by the court is whether Exxon can be punished under maritime law for the actions of the ship's captain, Joseph Hazelwood, who against company rules, had left the deck while on duty.

Prosecutors also maintained that Hazelwood was drunk when the ship ran aground on March 24, 1989, although he has denied the charge and was acquitted in criminal court.

Walter Dellinger, an attorney for the oil giant, argued before the justices that ExxonMobil should not be expected to pay billions of dollars in penalties "simply because against its policy rules Mr. Hazelwood left the deck."

But Jeffrey Fisher, a lawyer for the plaintiffs, maintained that the company was responsible for the actions of its employees.

"They can hire fit and competent people," Fisher argued.

Fisher said Hazelwood was an alcoholic who had been drinking on board the tanker, something which Exxon knew about even though it violated their rules.

After the disaster "the captain was fired, but everybody else in the chain of command who allowed this to happen received bonuses," Fisher argued.

"Apart from adopting a policy, they need to implement it," he said.

The case dates back to March 24, 1989, when the Exxon Valdez oil tanker crashed into a reef in Prince William Sound spilling 11 million gallons of crude into Alaskan fishing waters.

It was the worst oil disaster ever to hit the United States, polluting 500 kilometers (310 miles) of coastline, killing tens of thousands of birds and hundreds of sea otters.

ExxonMobil afterwards spent some 2.1 billion dollars cleaning up the polluted coastline and more than 300 million in compensation for fishermen and locals affected by the catastrophe.

But according a University of Alaska study, only a quarter of the marine life survived the spill. The also mishap ruined the livelihoods of some 34,000 fishermen, cannery workers, Alaska Natives, who were among the plaintiffs in the class-action lawsuit filed in 1994 agains the oil giant.

The plaintiffs originally were awarded five billion dollars in punitive damages in US District Court, a sum which, after a series of appeals, was cut to 2.5 billion dollars.

The US high court could uphold, reduce or totally do away with the damages award when it issues its ruling sometime after July.

The company also paid out more than 900 million dollars in fines in a bid to halt criminal proceedings launched against it by the US government and the state of Alaska.

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