Tiwi Islanders have won a landmark case against drilling for gas by Santos in their traditional waters after complaining that the company failed to consult them about the impact of the project. On Wednesday, judge Mordecai Bromberg set aside approval for the drilling, part of Santos’s $4.7bn Barossa project and gave Santos two weeks to shut down and remove its rig from the sea north of Melville Island. He said the offshore oil and gas regulator Nopsema failed to assess whether Santos had consulted with everyone affected by the proposed drilling, as required by the law. The case was brought by Dennis Tipakalippa, a senior lawman of the Munipi clan, the traditional owners of the northern Tiwi Islands. Tipakalippa told the court the Munipi and other traditional owners have “sea country”, to which they have a spiritual connection, to the north of the islands that extends into the Barossa project area. Speaking after the judgment, he said he was “the happiest man alive”. “We want Santos and all mining companies to remember – we are powerful, we will fight for our land and sea country, for our future generations, no matter how hard and how long,” he said. “We cannot be sidelined or silenced.” Alina Leikin, special counsel with the Environmental Defenders’ Office which represented Tipakalippa, said the ruling had “national and global implications for consultation with First Nations peoples on mining projects”. “Today’s decision puts oil and gas companies on notice,” she said. “It sets a new standard about the depth of consultation that companies are required to conduct with traditional owners before they gain approval for drilling in sea country.” Sign up to receive an email with the top stories from Guardian Australia every morning Santos had agreed to halt drilling while the lawsuit was on foot. As Guardian Australia has reported, Santos has also withdrawn separate applications for approval of a pipeline to the gasfield because of concerns within the company that it might also be vulnerable to legal challenge over consultation. Speaking in June when he launched the legal action, Tipakalippa said he said he was concerned about the effects if there was a spill. “We spend a lot of time out in the water – hunting, fishing. We only ever take what we can eat in a day, no more,” he said. “We respect our homelands, our sea country, and it looks after us. Santos should have respected us and consulted in the proper way.” In its application for Nopsema approval, Santos said it sent the Tiwi Land Council a consultation package by email on 11 June last year and followed up with a second email a few weeks later, on 2 July. It said “further contact attempts were made by phone” but “no response raising issues or concerns has been received to date”. However, Bromberg said the TLC did not have jurisdiction over sea country. In addition, the lack of response from the body “may also have raised a doubt or concern as to whether the invitation to engage in consultation had actually reached a person who was likely to have regarded the invitation as of relevance to any representative or other function that that person may have”. He said there was no evidence to suggest Nopsema understood that the Munipi needed to be consulted. “The absence of any such record, together with the evidence of the global, process-focused approach taken to that inquiry, sufficiently satisfies me that the sea country material that Nopsema was bound to consider was not considered,” he said. Opponents of onshore gas development in the Northern Territory’s Beetaloo basin said the case should be a “warning bell” for companies seeking production agreements in the territory. Jungai (cultural lawman) Johnny Wilson is the chair of the Nurrdalinji Native Title Aboriginal Corporation which represents traditional owners from the Beetaloo Basin. He said he recognised the efforts by Tiwi people to challenge the process and ensure communities were properly consulted. “We have asked our lawyers to closely examine the judgment and what it means for past and future consultation by companies hoping to frack for gas in the Beetaloo Basin,” he said. “The Tiwi people’s story is our story too. We have not been properly consulted by fracking companies, or the Northern Land Council, and when they do consult they often don’t consult widely.” Nopsema noted Bromberg’s ruling. “We are considering the implications of the decision,” a spokesperson said. “It is a matter for Santos to consider what the decision means for the Barossa project.” Santos said it was disappointed with the decision and would appeal to the full federal court. “As a result of the decision, the drilling activities will be suspended pending a favourable appeal outcome or the approval of a fresh environment plan,” the company said. “Santos will be seeking to expedite these processes.” It said its joint venture partners invested in the project “in good faith, and on the back of Australia’s historical reputation as a safe and stable investment destination”.