An animal welfare group claims overcrowding on livestock ships is common and vets are pressured to under-report deaths.
Animals Angels, an advocacy group based in Europe, has taken the Federal Department of Agriculture to the Federal Court in Sydney for failing to suspend the licence of Perth based International Livestock Exporters in 2008.
The case centres on a vet's claims that his report was edited to show fewer goats died on a voyage to Singapore.
The lawyer for Animals Angels, Dr Malcolm Caulfield, said outside the court that the Department has already heard from other vets that there's a problem.
"Vets, with vast experience on live export vessels, confirmed Dr Lloyd Reeve Johnson's allegations not only of being pressured by exporters not to report adverse events, but also that overstocking is probably routine in this industry."
The Commonwealth's barristers argued in court that the Department of Agriculture did investigate, and found the deaths to be of no consequence, and that the Department did not have to suspend the exporter's licence if it found a breach.
The judge has reserved his decision.
The Department of Agriculture says " a principled and independent regulator", which "constantly seeks to promote transparency and accountability" in its actions.