First Nations in Northern Ontario have lost a fight to force the provincial government to obtain federal approval before permitting logging on its traditional lands – a decision that helps clarify the jurisdiction of the two levels of government over resource extraction in territory covered by treaties.

In a unanimous ruling released Friday, the Supreme Court dismissed appeals by the Grassy Narrows First Nation and the Wabauskang First Nation of an Ontario court decision that said the province has the right to use treaty land for mining and forestry.

“Ontario has the power to take up lands in the Keewatin area under Treaty 3 without federal approval or supervision,” Chief Justice Beverly McLachlin wrote in the ruling.

The decision marks a rare defeat for First Nations that have turned to the courts to resolve disputes with governments and industry. It comes on the heels of a landmark decision in which the Supreme Court recognized the existence of aboriginal title over a vast swath of the B.C. Interior.

J.B. Fobister, a Grassy Narrows hunter who helped initiate the case, said in a statement that his people would not giving up their battle.

“This has been a long fight and while we are disappointed in today’s outcome we will be continuing to fight to protect the health, welfare and culture of the people of Grassy Narrows using all the tools available to us,” said Mr. Fobister. “We believe Ontario and industry are morally and politically obliged to seek our consent before logging our lands. Our people will ensure that the government, public, corporations, and courts never forget the terrible effect that industrial logging has had on the health and welfare of our people.”

“We will not be dismissed, no one is taking our resources without us benefiting and no one is going to destroy our children’s future,” Wabauskang First Nation Councillor Jo-Anne Petiquan-Moore said in a statement. “We will fight for our resources.”

The court said Ontario, and only Ontario, has the power to take up lands that are covered by Treaty 3, which covers the disputed area. “This is confirmed by constitutional provisions, the interpretation of the treaty, and legislation dealing with Treaty 3 lands,” Justice McLachlin wrote.

However, she said Ontario’s power to take up the treaty lands is not unconditional. Ontario must respect the harvesting rights of the Ojibway people, the ruling says, and their right to hunt, fish and trap in their traditional lands must not be infringed.

Bill Mauro, Ontario’s Minister of Natural Resources, said his government is reviewing the decision to determine its full implications for Ontario. “We are hopeful that this decision will provide an opportunity for all parties to focus on the best approaches moving forward,” said Mr. Mauro. “Ontario respects aboriginal and treaty rights and remains committed to developing positive relationships with First Nations, including Grassy Narrows and others in the Treaty 3 area.”

Friday’s ruling comes only two weeks after the court’s game-changing ruling in the Tsilhqot’in case expanded aboriginal rights to be declared owners of their ancestral lands, and to control what happens with those lands in the future. The Tsilhqot’in ruling gave a small aboriginal group title over a large swath of British Columbia, and increased the leverage of aboriginals in negotiations with outside business interests.

Friday’s decision centred on a promise the Grassy Narrows First Nation say was made in 1873, in return for allowing a national railway to be built through their territory: that the Canadian government would be the trustee of their lands, not the provinces.

For the past decade, the Ojibway have been fighting the Ontario government over a proposed forestry clear-cutting development on lands they signed over to the Crown shortly after Confederation.

The Supreme Court was asked to interpret the 1873 agreement between the Ojibway and the Canadian government. That agreement gave the Ojibway rights to hunt and fish on the 142,000 square kilometres of an area known as Treaty 3 in what is now Northwestern Ontario and a small section of Manitoba. It also gave the Crown the right to “take up” treaty lands. But in 1912, the boundaries changed, and the Ojibway found themselves dealing with Ontario, rather than the federal government (the lands at issue had previously been within the Northwest Territories).

The question for the Supreme Court was whether Ontario has the right to take up lands for development, or whether federal approval is needed. The Ojibway prefer to deal with the federal government, which they see as a trustee with a stronger duty toward them.

“What’s at stake is whether or not the province can authorize development on treaty lands without federal approval,” David Rosenberg, lead lawyer for the Tsilhqot’in, said in an interview. (He is not involved in the Ontario case.)

The Ojibway contend that the 1873 agreement requires the approval of the Canadian government for any development of their lands. They say they were in a good bargaining position at the time, and achieved the deal they wanted.

“Canada was driven by the imperative of gaining unfettered access to the west to satisfy its constitutional obligation to build a railway to British Columbia,” the group told the Supreme Court in in its written argument. “Canada also wanted to open the lands to the west for settlement, and recognized that given the geography of the region, a hostile Ojibway force could be a significant obstacle to the CPR and immigrant travel.”

The Canadian and Ontario governments disagreed with the Ojibway, however, arguing that the deal with the Crown was meant to be supervised by whatever level of government had jurisdiction over the area.

“There is no doubt that the Aboriginal parties understood that after the treaty, the Crown would be entitled to take up lands for settlement, mining, lumbering and other purposes. This exercise of Crown authority was not restricted to a particular order of government,” the federal government said in a document filed with the Supreme Court.

The trial judge sided with the Ojibway, saying federal supervision of the lands was required under the treaty. The Ontario Court of Appeal reversed that ruling, and said Ontario can take up lands for forestry within the Grassy Narrows treaty area.