The Federal Government is seeking $120 million in compensation after the Chinese ship Shen Neng One slammed into the Great Barrier Reef.

Hearings have finally begun after the grounding incident in 2010, which saw the 225-metre long coal carrier carve a 2.2 kilometre-long, 400,000-square-metre scar across Hampton Shoal.

The grounding also tore open a fuel tank on Shen Neng One, leaving a four kilometre streak of heavy fuel oil.

The ship was over 10 kilometres outside the shipping lane.

It is the most significant damage ever recorded by a ship on the Great Barrier Reef.

The Commonwealth is seeking $120 million in remediation costs from Shenzhen Energy Transport Co, the ship’s owner.

The government says it would alternatively want to see the company “fix” the damage to the shoal.

The court has heard that up to a tonne of paint flakes containing the highly-toxic anti-fouling agent tributyltin are now spread across about 112 hectares of shoal.

The compound was banned decades ago as it is lethal to marine life, but older vessels only have to apply a top-coat to continue operating.

“The poison, the contaminant in a flake, will be there as long as the flake is there,” said barrister Martin Scott, acting for the Commonwealth.

“Not all of these flakes are just sitting on the surface, some of them have become mixed into the sediment for example.”

Lawyers for Shenzhen Energy are trying to skirt liability, blaming the grounding on the ship's chief officer, who was employed by an independent company.

The chief officer, Xuegang Wang, has already been sentenced to 18 months in jail over the incident, while the ship’s master Jichang Wang pleaded guilty was fined $25,000 in 2012.

Shenzhen Energy Transport Co claims the $120 million damage bill is unrealistic.

The company has been arguing this week that the Reef is recovering naturally – something the Commonwealth strongly disputes.

Dozens of witnesses are lining up to take the stand during the four-week hearing.