An ongoing dispute between the Canadian government and four Manitoba First Nations over the future of the former Kapyong Barracks site in Winnipeg headed back to court today.

The Federal Court of Appeal heard arguments on Monday in the case, in which the First Nations argue they have a claim to some or all of the vacant former Canadian Forces base along Kenaston Boulevard.

Ottawa is appealing a 2012 Federal Court ruling that said it failed to consult four First Nations, or even communicate properly with them, on the sale of the Kapyong Barracks site.

The years-old court case has been holding up development of the barracks site, which is believed to be valuable land nestled between the affluent Tuxedo and River Heights neighbourhoods.

The Department of National Defence declared the 159-acre site surplus in 2004 after the 2nd Battalion, Princess Patricia's Canadian Light Infantry was relocated to CFB Shilo near Brandon, Man.

The federal Treasury Board tried to transfer the land to a Crown corporation known as Canada Lands Co. to oversee the land's redevelopment and resale, but six First Nations went to the Federal Court to block the move.

Four First Nations remain involved in the court case: Long Plain, Peguis, Roseau River and Swan Lake.

The First Nations argue that under a treaty land entitlement process, they were allowed to negotiate for federal property that has been declared surplus.

Lawyers for the First Nations argued on Monday that the government has a duty to consult the bands regarding the disposition of the land.

It's not known when the Federal Court of Appeal will issue a decision in the case.

The federal government has spent millions of dollars over the years to maintain the barracks property and keep it secured.

First Nations leaders have said they would prefer to sit down with the government and work out a deal, ideally towards building a mixed commercial and residential development there.