A legal challenge filed in a federal court by the Hupacasath First Nation in B.C. is standing in the way of the Canadian government ratifying a controversial investment treaty with China, says a member of the small B.C. community.

The federal government was swift to sign a Foreign Investment Promotion and Protection Agreement with China last September, but it cannot take effect until it has been ratified by both sides.

Brenda Sayers, a member of the Hupacasath First Nations, told CBC News the federal government agreed to "hold off on the ratification until due process took place in court."

The Hupacasath First Nation is located in Port Alberni, B.C., and consists of approximately 300 members across five reserves.

The small First Nations community argued in federal court in June that the federal government is required to consult First Nations under Section 35 of the Constitution Act, which provides constitutional protection to the aboriginal and treaty rights of aboriginal peoples in Canada.

According to Sayers, if the investment treaty is ratified, Chinese investors would have control over major assets such as coal on its 232,000-hectare territory.

The extraction of resources by foreign firms would strip negotiating powers for First Nations, which are involved in the treaty process.

"We are saying that the federal government failed to consult," Sayers said.

But lawyers for the federal government argued that a duty to consult does not apply in this case.

A spokesman for International Trade Minister Ed Fast told CBC News in a written statement, "the FIPA contains the exceptions found in our other treaties that preserve policy flexibility for certain sectors and activities, including rights or preferences provided to aboriginal peoples."

"Furthermore, the Canada-China FIPA, like Canada's other FIPAs, provides a policy carve-out for government measures concerning rights or preferences provided to aboriginal peoples," said Rudy Husny, the spokesman for the minister of international trade.

The investment treaty with China, according to the federal government, "will provide stronger protection for Canadians investing in China, and facilitate the creation of jobs and economic growth here at home."

Since 2006, the Harper government has concluded or brought into force FIPAs with 14 countries, and is actively negotiating with 12 others.

The FIPA with China contains "all of the core substantive obligations that are standard in our other FIPAs," Husny said.

The Opposition New Democrats have opposed the treaty in its current form, saying it contains significant gaps and provides few benefits for Canada. The NDP also deplored that investment treaties need not be debated in Parliament.

Don Davies, the NDP critic for international trade, told CBC News "this government has, once again, refused to consult with and open a dialogue with Canada’s First Nations about the potential impact of the FIPA on their rights and communities."

"We know we can sign trade and investment treaties that benefit Canadians, respect our First Nations, and enhance our economy," Davies said in a written statement.

Members of the Hupacasath First Nation in B.C. held a rally on Parliament Hill in Ottawa on Sunday to gather support for their court challenge pending a federal court ruling.

Sayers said members of the B.C. community are touring the provinces of Quebec and Ontario to inform Canadians about the consequences of ratifying the investment treaty with China.

A ruling could come as early as the end of August.