A Canadian court on Thursday quashed the government's approval of the Trans Mountain pipeline to the Pacific, siding with indigenous people worried that increased tanker traffic will harm whales along the coast.

The ruling was cheered by opponents of the nation's largest resource project in decades, while Prime Minister Justin Trudeau's administration suggested it had been dealt a temporary setback and vowed to carry on.

In its decision, the Federal Court of Appeal said Ottawa -- which is expected to close a deal on Friday to buy the pipeline from Kinder Morgan for Can$4.5 billion (US$3.5 billion) -- must take a second look at the project, taking greater care to consult with indigenous tribes and consider marine traffic impacts.

"We are absolutely committed to moving forward with this project," Finance Minister Bill Morneau told a press conference in Toronto.

"We want to make sure the project proceeds, but we want to make sure it moves ahead in the right way," he added, explaining that the government would review the ruling to see how it can address environmental and indigenous concerns.

The 1,150-kilometer (715-mile) pipeline was to move 890,000 barrels of oil a day from landlocked Alberta province to the Pacific coast for export overseas, replacing a smaller crumbling conduit built in 1953.

Trudeau took a political gamble when his government approved the project in 2016 after an environmental review, saying it was in the "national interest" as it would help ease Canada's reliance on the US market, and get a better price for its crude oil.

A slim majority of Canadians support the pipeline's construction, according to recent polling.

But it has continued to face stiff opposition from environmentalist activists -- who once supported Trudeau's rise to power -- and indigenous tribes concerned that increased shipping from a marine terminal at the end of the route in Vancouver will impede the recovery of killer whale populations in the area.

Greenpeace and others called the court's decision a "major victory" for indigenous rights and efforts to curtail global warming.

"They can say they consulted, but they never, ever, ever got our consent," said Lee Spahan, chief of the Coldwater First Nation, which led the legal challenge.

For others on both sides of the issue the decision was confirmation that the regulatory process for approving major resource projects in Canada is "flawed."

- 'Broken regulatory system' -

"This decision is yet another example of how Canada's broken regulatory system is undermining Canadian competitiveness and driving away investment," commented Perrin Beatty, president of the Canadian Chamber of Commerce.

The court concluded that the National Energy Board made a "critical error" in not considering marine shipping impacts, leading to "unacceptable deficiencies" in its recommendations to the government to greenlight the project.

It also said the government failed in its constitutional duty to "engage, dialogue meaningfully and grapple with the real concerns of the indigenous applicants so as to explore possible accommodation of those concerns."

At the same time the decision was posted, Kinder Morgan shareholders voted overwhelmingly (99.9 percent) at a meeting in Calgary, Alberta to approve the pipeline's sale to the federal government.

The company temporarily halted construction earlier this year, saying it was concerned that feuding between the governments of Alberta and British Columbia, which sided with environmental groups fiercely opposed to the project, created undue political risks.

That prompted Ottawa's offer to take it over, effectively nationalizing the pipeline in a bid to bring a swift end to legal challenges and illegal protests at construction sites.

Morneau said it also aimed to reassure foreign investors, and advance Canada's climate goals.

Currently 99 percent of Canada's oil is sold to the United States at a discount, and access to the Pacific coast is seen as key to diversifying the world's sixth largest oil producer's energy exports.

Access to new oil markets is also key to Canada meeting its Paris climate target because Alberta -- the nation's single largest pollution emitter -- agreed to take action against carbon emissions only if it gained access to new markets for its oil.

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