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Candles form a heart around a banner during a vigil on Canada's first National Day for Truth and Reconciliation, honouring the lost children and survivors of Indigenous residential schools, their families and communities, at Chiefswood Park in Ohsweken, Ont., on Sept. 30.CARLOS OSORIO/Reuters

Prime Minister Justin Trudeau is being urged to accept a court ruling that could cost billions in compensation to Indigenous children and families but would contribute toward reconciliation.

The ruling is about the federal role in the mass removal of Indigenous children from their families under child-welfare law since 2006. The judge who made the ruling – Federal Court Justice Paul Favel – is a Cree appointed by the Trudeau government. He concluded his ruling with a plea for reconciliation.

Critics have called the child-welfare system the modern equivalent of the residential schools. And the Trudeau government has made Sept. 30 the National Day for Truth and Reconciliation, a federal statutory holiday to honour the children who attended those institutions.

Pointedly, the Federal Court issued the ruling on Sept. 29.

“The judgment is clear, fair and unambiguous,” said Senator David Arnot, a former judge and director-general of aboriginal justice in the federal Justice Department. The Trudeau government appointed him to the Senate this summer for Saskatchewan.

“The treatment of Indigenous peoples in this country is Canada’s national shame. ... In these circumstances, I would encourage the government of Canada to abandon the litigation approach and to move in a direction of reconciliation, which is what we need in this country.”

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The legal battle started with a complaint of discrimination – that Ottawa’s child-welfare services (on-reserve or in Yukon) were inequitably funded compared to provincially funded services, and were funded in such a way that agencies had incentives to remove children from their families. The complaint, by two Indigenous groups, reached the Canadian Human Rights Tribunal. A Conservative government went to court in a failed attempt to stop it from being heard. Eventually, the tribunal upheld the complaint, and awarded $40,000 for each child taken into care. That includes $20,000 for what the tribunal found was the government’s recklessness and willfulness about the harm it was causing. Parents or grandparents can also claim compensation. Tens of thousands of people may be eligible.

Indigenous Services Minister Marc Miller has acknowledged harms done to the children in care, but has said the tribunal went beyond its jurisdiction in its compensation plan. This week, he said he is reviewing Justice Favel’s ruling, and that the government is committed to compensating First Nations children removed from their families and communities.

The Liberal government sought a judicial review from the Federal Court. Under Canadian law, the court reviewing a decision from a specialized tribunal must decide whether it was “reasonable,” not whether it was right or wrong. That standard defers to the expertise of tribunals.

The government had argued that the tribunal had acted in effect as a court giving damage awards, rather than as a human rights body. It also said the tribunal’s decision was poorly explained, and that it was wrong about the government being willful and reckless. Justice Favel found the tribunal’s decision reasonable on all counts. He said the harms to children had been shown in many government and other reports, and that federal human-rights law allows compensation for pain, suffering and loss of dignity owing to discrimination.

The government has 30 days to decide whether to ask the Federal Court of Appeal to throw out the ruling.

“This is what I would call pretty much a bulletproof decision,” said Mary Ellen Turpel-Lafond, a former judge who is now a member of the law faculty at the University of British Columbia’s Allard Law School. “It’s modest, cautious, well-reasoned.”

Prof. Turpel-Lafond, who taught Justice Favel at Dalhousie University’s law school, said “the next level of appeal after this is simply malice.” She added: “It will do nothing but embitter the relationship” with Indigenous peoples.

Drew Lafond, the president of the Indigenous Bar Association, called the ruling “beautifully written and courageous.”

He said an appeal would not surprise him.

“At this stage, nothing would surprise me. I wouldn’t put it past the Trudeau government to continue to appeal this up the chain to the Federal Court of Appeal and ultimately to the Supreme Court of Canada, notwithstanding the public gestures they’ve made toward the support of Indigenous children.”

Justice Favel is a member of Poundmaker Cree Nation in Saskatchewan. He is descended – according to Prof. Turpel-Lafond– from Chief Poundmaker and Big Bear, two First Nations leaders who were pivotal in the establishment of 19th-century treaties. (The Federal Court was closed on Thursday, and a spokeswoman said she could not contact the judge to confirm his ancestry.)

Mr. Arnot knows Justice Favel well from having worked with him. He said Justice Favel is steeped in the traditions of his people – a practitioner of Cree spirituality who deeply respects Indigenous elders. Before his Senate appointment, Mr. Arnot was Chief Human Rights Commissioner of Saskatchewan when Justice Favel was deputy chief commissioner of the Saskatchewan Human Rights Commission. Mr. Arnot is also a former federal Treaty Commissioner for Saskatchewan, and Justice Favel represented an Indigenous group in treaty discussions before becoming a judge.

“He is a person with a great judicial temperament,” Mr. Arnot said, explaining that this means “neutral, respectful, careful with words.”

In his ruling, Justice Favel quoted Chief Poundmaker, who was convicted of treason in the 1885 Northwest Rebellion, but pardoned by Mr. Trudeau two years ago.

“We all know the story about the man who sat by the trail too long, and then it grew over, and he could never find his way again. We can never forget what has happened, but we cannot go back. Nor can we just sit beside the trail,” Chief Poundmaker said.

Prof. Turpel-Lafond called this section of Justice Favel’s ruling “very wise and gentle and extremely helpful.”

Mr. Trudeau quoted those same words from Chief Poundmaker in announcing the pardon, then added that the government has been ”sitting beside the trail for far too long.”

The Prime Minister’s Office referred a request for comment to Mr. Miller’s office.

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