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A decision that ordered compensation to children harmed by the First Nations child welfare system was “wrong in law,” a Justice Department lawyer told the Federal Court on Monday.

The Canadian Human Rights Tribunal in September ordered the federal government to provide compensation of up to $40,000 to First Nations children who were unnecessarily taken into care on or after Jan. 1, 2006, and said it applied to parents or grandparents and children denied essential services.

The tribunal gave the organizations that sought the ruling and the federal government until Dec. 10 to develop a plan to distribute the compensation.

The federal government on Monday submitted a motion to the court for a stay of the ruling pending a judicial review, the latest episode in a legal battle that has been under way for 13 years. The requests for a stay and a review have prompted Indigenous leaders and advocates to question the Liberal government’s commitment to reconciliation.

Before proceedings began, the Trudeau government attempted to blunt criticism outside of the courtroom, saying in a statement that it will support an attempt to bring a separate class-action lawsuit on Indigenous child welfare, and looks forward to a settlement.

Indigenous Services Minister Marc Miller told The Globe and Mail all Ottawa did on Monday was ask for a stay of the ruling so it can examine other options, including working with the plaintiffs’ council in the lawsuit to have it certified as a class action.

He said the government sees the proposed class action as the proper venue to address compensation, adding that the human rights tribunal case covers 10 years, while the lawsuit would go back until 1991.

The government has a track record of settling class actions, Mr. Miller added, pointing to resolutions on the 1960s scoop, the Indian day schools, or the residential schools.

“This isn’t an issue of dollars,” he said. “This is an issue of approach and appropriate, fair, equitable compensation."

In a legal submission, Justice Department lawyer Robert Frater and others said the ruling was wrong in law, raising “serious issues” about the jurisdiction of the tribunal and the “reasonableness” of the compensation ruling.

“These issues concern the respective roles of a specialized tribunal and the courts,” the document said. “The compensation ruling amounts to the imposition of a class settlement without a defined class."

The government wants to find a process that is more inclusive, he added.

“Canada is committed to remedying the injustices of the past,” Mr. Frater said.

Satisfying the entire order from the tribunal could cost $5-billion to $6-billion if the compensation was paid out by 2020, assistant deputy minister of Indigenous services Sony Perron said in an affidavit this fall.

Ottawa’s decision during the election campaign to seeks a review of the decision and request a stay sparked swift backlash from Indigenous leaders, advocates, the NDP and the Green Party.

Mr. Miller said the government does not typically comment on ongoing litigation, but it important to speak due to the emotional nature of the subject.

“We feel the need to explain why we are taking some exception to parts of the case,” he said.

Mr. Miller and Justice Minister David Lametti said the tribunal’s compensation decision does not properly address all issues around appropriate compensation.

“As such, Canada intends to pursue a judicial review of this ... ruling," the ministers said in a joint statement.

Assembly of First Nations National Chief Perry Bellegarde said on Monday in an interview the Canadian Human Rights Tribunal is a “very legitimate" forum to determine compensation, adding that the government’s decision to seek a judicial review and stay was out of step with its commitment to reconciliation.

Cindy Blackstock, the executive director of the First Nations Child and Family Caring Society, said on Monday it is difficult to reach a settlement when the federal government “continues to fight the children and families in court” who were harmed by Canada’s ongoing discriminatory conduct.

“This is just a statement,” Ms. Blackstock said of the government’s announcement that it will help work toward the certification of the lawsuit. "The kids need action.”

Veteran NDP MP Charlie Angus, who attended Monday’s hearing, said it is hard to take the government seriously when its legal submissions clearly state it does not accept responsibility for paying compensation for the “damage they have done.”

Federal Court proceedings on the stay continue on Tuesday.

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