The Supreme Court of Canada has quashed plans for seismic testing in Nunavut, delivering a major victory to Inuit who argued they were inadequately consulted before the National Energy Board gave oil companies the green light to conduct the disruptive activity.

In a unanimous decision handed down Wednesday, written by justices Karakatsanis and Brown, the top court ruled the NEB's consultation process in Clyde River was "significantly flawed" and gave little, if any, consideration to the treaty rights of Inuit and their reliance on marine mammals for subsistence.

The Inuit have said the sound wave technology a Norwegian consortium sought to use in search of oil would have profoundly affected marine life in the area.

Former Clyde River Mayor - 'we were on the right side of justice'1:32

"What a victory for us," said Jerry Natanine, a former mayor of Clyde River who pushed this case for years, after the ruling was released. "Justice was on our side because we're fighting for our way of life, our hunting and gathering culture — whaling and sealing — that's our lifestyle, that's what we want to protect."

'We're not totally against development'

Despite his opposition to this round of testing, Natanine said his community is not ruling out co-operation with energy companies in the future. "We're not totally against development, but it has to be done right. You know, whales don't have to die, seals don't have to die off, plankton. There's a better way to do these things, that's what we've got to find out."

"Justice has prevailed," Nader Hasan, Clyde River's lawyer, said. "The NEB process is broken, the NEB never met a pipeline project or an oil project it didn't like, and that's reflected in decades of jurisprudence. Clyde River was successful, but what about the next Clyde River? That community might not have the ability to take their case to the courts."

The court rescinded the NEB's 2014 decision to grant a five-year permit to the companies to conduct seismic testing or "blasting," which sends sound waves to see if there are reserves under the sea floor.

In a similar decision released Wednesday, the top court ruled unanimously that Enbridge could proceed with its reversal of the Line 9 pipeline in southwestern Ontario, arguing the Chippewas of the Thames were given enough say ahead of the project's construction.

The court sent a shot across the bow in its ruling, warning the NEB and energy project proponents that "any decision affecting Aboriginal or treaty rights made on the basis of inadequate consultation will not be in compliance with the duty to consult."

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Inuit activist Jerry Natanine smiles after the Clyde River Inuit blocked seismic testing that they say would have killed marine mammals in the area. (Sean Kilpatrick/Canadian Press)

But the ruling said consultations are a two-way street and Indigenous Peoples alone should not be given the final say on whether a project should proceed. Aboriginal rights must be balanced against "competing societal interests," the court said.

"This does not mean that the interests of Indigenous groups cannot be balanced with other interests at the accommodation stage," the justices wrote. "Indeed, it is for this reason that the duty to consult does not provide Indigenous groups with a 'veto' over final Crown decisions."

NEB can consult on behalf of the Crown

The federal government has a duty to consult with Indigenous Peoples when there is a claim that an Indigenous or treaty right will be breached.

Significantly, the Supreme Court ruled Wednesday the federal government could rely on the NEB to carry out that consultation on its behalf. Some Indigenous activists have said a quasi-judicial body tasked with energy regulation should not play that role; the court clearly disagreed.

The top court found that the NEB, acting as an agent of the Crown, simply did not do enough in the Clyde River case, holding only one meeting with the community, where officials from the oil company could answer few pressing questions.

The significance of this "consultation" process was not explained to the Inuit, the court said. When officials from the company did eventually answer basic questions about the impact on marine mammals such as whales and narwhals, it did so by electronically delivering a 3,926-page document that was virtually inaccessible for residents of the northern locale with limited internet access. The document was largely in English, while residents are overwhelmingly Inuktitut speakers.

Clyde River boats hunters seismic testing

In Clyde River people rely on hunting for food year round. They argue seismic testing could put their livelihoods at risk. (Elyse Skura/CBC)

"To put it mildly, furnishing answers to questions that went to the heart of the treaty rights at stake in the form of a practically inaccessible document dump months after the questions were initially asked in person is not true consultation," the court said.

Petroleum Geo-Services (PGS), the Norwegian company that was poised to begin seismic testing, said it was "disappointed" the Supreme Court overturned the NEB's initial ruling.

"PGS always complys with the rules and regulations in the countries where we operate and will need to consider our plans for any future seismic acquisition in this region accordingly," Bard Stenberg, a spokesperson for the company, said.

The top court will allow an appeal of a Federal Court of Appeal decision to proceed; that court had ruled the NEB had done enough to satisfy the duty to consult.

Lawyer for Nunavut community says duty to consult must be taken seriously1:51

Hasan, the Indigenous rights lawyer who argued the Inuit case, said the government must fully implement the United Nations Declaration on the Rights of Indigenous Peoples, which includes adopting the doctrine of "free, prior and informed consent" on projects that affect Indigenous territory.

"I hope for Mr. Trudeau and his cabinet that this decision functions as a bit of a wake-up call."

A spokesman for Natural Resources Minister Jim Carr said he is still reviewing the ruling but reiterated a commitment to reform the NEB "to ensure meaningful and effective consultation with Indigenous Peoples."

An expert panel recently appointed by Carr suggested the NEB be scrapped and replaced with two new agencies, with many of regulatory functions moved from Calgary to Ottawa. The panel also called for "real and substantive" participation from First Nations communities in the decision-making process.

'Deep consultation'

Importantly, the court also laid out Wednesday what "deep consultation" with Indigenous Peoples should entail moving forward.

It said the NEB is fully equipped to conduct consultations, and should hold oral hearings and use its broad powers to elicit critical information from proponents such as scientific evidence.

The NEB should also make money available for Indigenous groups to participate in the process, conduct environmental assessments and make those findings public.

The Supreme Court said the NEB did exactly that before allowing Enbridge to reverse a pipeline and transfer heavy crude from Alberta through a project that runs from Sarnia, Ont., to Montreal. The line has been in active service since 2015.

First Nations in the area had argued that the risk of spills could affect their rights and interests. The NEB said legally binding environmental conditions were adequate to accommodate Indigenous concerns.

The Chippewas were granted funding to participate as an intervener, and were involved during oral hearings and had the opportunity to present evidence and a final argument. The Chippewas were also able to pose questions to Enbridge, and they received written responses. The court said, in this case, consultation was "manifestly adequate."

Myeengun Henry

Former Chippewas of the Thames Chief Myeengun Henry has said his community was taking a big risk by pursuing a Supreme Court case against Enbridge. 'We're just trying to stop a very dangerous situation,' he says. (Chippewassolidarity.org)

"The NEB sufficiently assessed the potential impacts on the rights of Indigenous groups and found that the risk of negative consequences was minimal and could be mitigated," the court ruled.

In a statement Wednesday, Enbridge welcomed the Supreme Court's decision and vowed to continue consultations with First Nations in the area.

The Chippewas' request for an appeal of a previous Federal Court decision was dismissed by the Supreme Court.

Energy sector uncertainty

The decisions come amid a time of uncertainty for Canada's energy sector, and further threats to the federal government's natural resources agenda.

On Tuesday, proponents of a massive $11 billion Pacific NorthWest LNG project on B.C.'s coast pulled the plug, less than a year after the Liberal government gave the green light.

The Trans Mountain pipeline expansion, which will carry nearly a million barrels of oil a day from Alberta to B.C. for export to Asia, is also hanging in the balance, as new B.C. Premier John Horgan has long opposed its construction.