Gas giant Santos has lost its bid to restart drilling at a multimillion-dollar gas project off the Tiwi Islands.
The full Federal Court on Friday dismissed the company's appeal, upholding an earlier decision that the offshore gas regulator should not have approved drilling in the Barossa gas field, 265 kilometres northwest of Darwin.
Tiwi Islander and Munupi man Dennis Tipakalippa in June launched the legal action against Santos, claiming he was not consulted over the company's environmental plan.
Mr Tipakalippa said the federal court's latest decision would put companies on notice.
"We want the whole world to hear our voice," he said in a statement.
"We want the whole world to see our power. We have fought to protect our sea country from the beginning to the end and we will never stop fighting."
Federal Court judge Mordecai Bromberg first ruled in Mr Tipakalippa's favour in September, finding the regulator should not have approved the environmental plan.
He ordered the approval to be set aside and drilling to be stopped, but Santos appealed the decision last month.
Santos argued Justice Bromberg did not properly consider what constituted a "relevant person" who needed to be consulted.
The company's barrister, Christopher Horan KC, said under the regulations a relevant person was someone whose "functions, interests or activities" could be affected by the drilling work.
Mr Horan argued the Tiwi Islands' traditional owners had a connection to sea country that was genuine, however it did not constitute the type of legal interest required.
But Federal Court justices Susan Kenny, Debra Mortimer and Michael Lee rejected that proposition, saying the Tiwi Islanders' interests were "immediate and direct".
"We consider it clear that Mr Tipakalippa and the Munupi clan had interests within the meaning of (the regulations) that required them to be consulted," the judges said.
"Within this regulatory framework, 'interests' includes cultural and spiritual interests of the kind described in the sea country material in the drilling environment plan and attachments."
The Federal Court also rejected Santos's claim it would be unworkable to identify and consult with every traditional owner who held an interest in the project.
"These clans are identified by name," the judges said.
"In contemporary Australia, there are a myriad of ways of contacting groups of First Nations peoples.
"Granted, a consultation with First Nations groups may not be as simple (or quick) as sending an email with a package of information."
AAP has contacted Santos for comment.
The National Offshore Petroleum Safety and Environmental Management Authority noted the Federal Court's decision.
"We are currently considering its implications," a spokesperson said in a statement.
"It is a matter for Santos as to what the decision means for the Barossa project."
The $US3.6 billion ($A5.5 billion) offshore natural gas development was expected to create up to 600 jobs and pipe gas 280km to the Darwin LNG facility when production began in 2025.
The company has previously said the project, which was 43 per cent complete and on schedule before the September court decision, is one of the world's lowest-cost new LNG supply projects.
