The Ontario Court of Appeal has upheld the province's right to negotiate with Six Nations protesters as they continue to occupy a former housing development site in Caledonia.

In a decision released Thursday, the Appeal Court states that Ontario Superior Court Justice David Marshall "erred" in his Aug. 8 ruling, which forbade negotiations over a land-claim dispute until protesters ended their occupation.

When he made the ruling in August, Marshall complained that the police and province had ignored a previous order he issued in March, which ordered protesters to vacate the site near Hamilton. He said the continued occupation made a mockery of the rule of law.

But the Appeal Court decision stated that the order for protesters to leave was made at the request of a previous owner of the 40-hectare parcel of land and when the government bought the land, it became null and void.

"Ontario is content to permit the peaceful occupation of its property," the decision reads. "It has the right to do so. As a property owner it has the right to use its own land as it sees fit."

Premier Dalton McGuinty said he was happy the three-judge panel reaffirmed the province's right to continue talks with the protesters, but also took the opportunity to point out that land claims are a federal matter.

"We are now waiting for the federal government to bring a substantive proposal to the table that would involve a number of aspects related to this land claim, including the use of this specific parcel," said McGuinty.

Darrell Doxtdator, a senior political adviser to the elected Six Nations chief, believes the Appeal Court ruling will reduce the possibility of conflict at the site. The occupation of the former housing subdivision began nearly 11 months ago and has at times seen violent conflict.

But Doxtdator wishes the Appeal Court had the power to go further than Thursday's ruling.

"I'm afraid the powers of the appellate court don't include being able to speed up the federal government," he said.

The Appeal Court also ruled that contempt of court convictions against 21 protesters were seriously flawed and could therefore be appealed.