In an opinion penned by Justice David Souter the high court said that Exxon Mobil should not have to pay punitive damages exceeding compensatory damges already awarded.

"Our explanation of the constitutional upper limit confirms that the 1:1 ration is not too low," Souter wrote.

"Applying this standard to the present case, we take for granted the District Court's calculation of the total relevant compensatory damages at 507.5 million," he wrote.

"A punitive-to-compensatory ratio of 1:1 thus yields maximum punitive damages in that amount."

The ruling vacated a federal appeals court award of 2.5 billion dollars and remanded the case to the lower court "to remit the punitive damages award accordingly."

It was the latest twist in a long-running saga which began when the Exxon Valdez crashed into a reef in Prince William Sound, Alaska, on March 24, 1989 spilling 11 million gallons of crude into the waters.

It was the worst oil disaster ever to hit the United States, and afterwards ExxonMobil 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.

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

But in 1994, a jury in a civil Alaskan lawsuit ordered the Texas-based firm to pay five billion dollars in damages to some 34,000 fishermen and others who worked in the Prince William Sound.

That sum was cut to four billion in December 2002, and then increased to 4.5 billion in January 2004 in various appellate rulings.

Then in December, the US Court of Appeal cut the punitive damages to 2.5 billion saying the amount was more in line with legal precedent.

"We do so because, in assessing the reprehensibility of Exxon's misconduct ... there are several mitigating facts," Judges Mary Schroeder and Andrew Kleinfeld wrote.

"These include prompt action taken by Exxon both to clean up the oil and to compensate the plaintiffs for economic losses. These mollify, at least to some material degree, the reprehensibility in economic terms of Exxon's original misconduct."

ExxonMobil had engaged the country's top court to consider whether it should have any damages awarded against it under existing maritime law, and if so whether such high compensation is justified.

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