First Nation leaders claimed a victory in the legal battle with the federal government over the Kapyong Barracks site, near Grant Avenue and Kenaston Boulevard, in Winnipeg.

"This court challenge was to tell the government of Canada to stop taking our lands, to stop taking our rights to sovereignty ... and to stop denying us the economic opportunities that so many other Canadians take for granted," said Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs.

Federal Court Justice Roger Hughes ruled that Ottawa was wrong to start selling a 65-hectare section of a former military base, known as the Kapyong Barracks, without first consulting four First Nations communities which have outstanding land entitlements from Treaty One, signed in 1871.

The federal government had plans in 2005 to sell the property for redevelopment, which had sat vacant since 2004.

Soon after, the First Nations filed a court motion claiming ownership of the land because of the 1871 treaty.

The court initially sided with aboriginal leaders. Ottawa appealed and the case returned to the courts, prior to this week's decision.

In this week’s decision, Hughes wrote that the four First Nations -- Long Plain, Peguis, Roseau River and Sandy Bay -- have an "arguable but by no means certain claim" to the Kapyong Barracks. He ordered the government to stop sale of the land until the communities are consulted.

“We feel entirely vindicated by this decision,” said Peguis Chief Glenn Hudson.

“We acknowledge that this is a victory not only for the Treaty One First Nations, but a victory for the citizens of Winnipeg as well. We can move forward in the spirit of collaboration on seeking positive and prosperous development for this region,” said Hudson.

CTV News is told the government and First Nations were close to coming to an agreement two weeks ago, but details of it being leaked early on ultimately delayed negotiations between the two sides.

If an agreement is reached, First Nation leaders said they want the land to be a mix of commercial and residential property.

"Winnipeggers need not be afraid of this court decision. This court is a marker along the way to greater economic prosperity for not just the citizens of Winnipeg, but all of Manitoba,” said Nepinak.

“First Nations leadership wants nothing more than to help their people, our people, acquire employment, housing, and all the other opportunities afforded to other Manitobans,” said Nepinak.

Some people who live in the area call the vacant property an eyesore and told CTV News it should have been redeveloped years ago.

Some residents, however, said they feel left out of the process and want a say in plans for the site development.

Chief Hudson said development of the land should be done in a cooperative manner.

“All Treaty One First Nations look forward to working cooperatively with the City of Winnipeg, to develop these lands in a way consistent with or respectful of appropriate urban planning in consultation with our neighbouring communities,” said Hudson.

The judge’s ruling means that the federal government has to consult with the First Nations to try and negotiate a deal both sides agree on, meaning more work would still need to be completed to determine the future of the Kapyong site.

The federal government said Friday it’s studying the judge’s ruling.

It’s not yet clear whether it will appeal.

- with files from The Canadian Press