TORONTO, Aug 17 (Thomson Reuters Foundation) - Land rights campaigners have hailed a decision by Brazil’s Supreme Court to rule against a state seeking compensation for land declared indigenous territory by the national government.

Mato Grosso, a central Brazilian state with a powerful agriculture industry and simmering land-related violence, said the national government had illegally given away state land to indigenous people.

The Supreme Court on Wednesday ruled unanimously against Mato Grosso, ordering the western state to respect territory demarcation for indigenous people, in a case followed closely by land rights activists and Brazil’s farm lobby.

“The lands were not owned by the state of Mato Grosso because they were traditionally occupied by indigenous peoples,” Supreme Court Justice Marco Aurélio Mello wrote in the ruling.

Mato Grosso sought about $2 billion reais ($635 million) in compensation from Brazil’s authorities.

Litigation over demarcation of the land, including territory around the Xingu National Park, had been ongoing for more than twenty years.

A decision in the state’s favor would have reverberated far beyond Mato Grosso, activists said, leading other state governments to try and weaken indigenous land rights.

“It is a very important victory for our people, our family that is there in Mato Grosso suffering and fighting for health and territory,” indigenous activist Adilio Benites told the Brazilian web portal G1 after the court’s decision.

Mato Grosso was ordered to pay the federal government’s legal bill of about 100,000 reais, local media reported.

About 13 percent of Brazil’s land has been set aside for the country’s 900,000 indigenous people based on the territories they historically occupied.

Brazil is the world’s top exporter of coffee, sugar and soy and deadly conflicts over land between farmers and indigenous groups are common.