The Federal Regional Court of the First Region ruled on Tuesday that native communities affected by the Belo Monte dam in the Amazon must be heard before work resumes.

It said that the controversial project had been approved by the Brazilian Congress in 2005 on the proviso that an environmental impact study be conducted after work started. The court found that indigenous people were not given the right to air their views in Congress on the basis of the study's findings, as was stipulated by law.

Norte Energia, the construction company which is running the project, faces fines of $250,000 (202,800 euros) a day if it chooses to ignore the ruling. It has the right to appeal the ruling in a higher court.

Construction began a year ago on the dam, which runs across the Xingu River, a tributary of the Amazon. It was met by fierce opposition from local people and green activists.

Opponents argue it will reduce the volume of water in the Xingu River and affect populations of fish that are a staple in the diet of local indigenous peoples. They say it will lead to the displacement of around 20,000 people.

Environmentalists, meanwhile, warn of deforestation, greenhouse-gas emissions and irreparable damage to the ecosystem.

Due to be operational by 2014, the dam was designed to produce over 11,000 megawatts of electricity. If completed, it will only be surpassed in size by China's Three Gorges facility, and Brazil's Itaipu dam in the south.

ccp/crh (AFP, dpa)