Hundreds of Indigenous demonstrators, many in traditional feather headdresses, rallied in Brasilia as the court weighed the legality of the so-called "time-frame argument," which holds that native peoples should not have the right to lands where they were not present in 1988, when the country's current constitution was ratified.
Indigenous groups say that argument violates their rights, given that many groups were forced from their ancestral lands, including during the military dictatorship that ruled Brazil from the 1960s to 1980s.
"Today is another historic day for Brazil's Indigenous peoples," Indigenous leader Kreta Kaingang told a news conference.
"We are confident we will leave here with the time-frame argument buried, and we will start a new life."
Another Indigenous leader, Isabela Xokleng said: "We are here for our ancestors... We want new generations to be assured a better future."
So far, five of the Supreme Court's 11 justices have ruled with the Indigenous plaintiffs in the case, and two against them.
A majority is needed to decide the case.
"We are judging the destiny of the original peoples of our country," justice Antonio Dias Toffoli, the fifth judge to reject the time-frame argument, said Wednesday.
Debate was set to continue Thursday.
Climate campaigners have joined Indigenous activists in pressing for the court to reject the time-frame argument, as studies have found protected Indigenous reservations are one of the best ways to fight deforestation and, with it, global warming.
The limitation is backed by Brazil's powerful agribusiness lobby, which scored a victory in May when the lower house of Congress passed a bill enshrining the 1988 cutoff in law.
The bill is now working its way through the Senate.
The constitution makes no mention of a cutoff date in relation to Indigenous reservations, which currently cover 11.6 percent of Brazil's territory, notably in the Amazon rainforest.
Brazil has around 1.7 million Indigenous inhabitants -- 0.8 percent of the population.
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