Malaysia's top court has ruled that the government's seizure of tribal lands on Borneo island to build a large dam does not violate the rights of indigenous tribes people.

The ruling ends a decade-long legal battle by villagers in eastern Sarawak state who claim the local government illegally seized land to build a $2 billion hydro-electric dam on territory occupied by their ancestors for thousands of years.

Some 15,000 people were forcibly relocated in the late 1990s to make room for the Bakun dam and a large reservoir. Many claim they were not adequately compensated.

In Thursday's ruling, A three-judge Federal Court panel unanimously dismissed an appeal of a lower court ruling made by a confederation of tribes living on Borneo. The island is split among Malaysia, Indonesia and Brunei.

An estimated 100 other land rights lawsuits brought by indigenous peoples are reported currently active in Malaysian courts, and it was not immediately clear what impact the High Court ruling would have on those cases.

The Bakun power plant began generating electricity last month.