The former Russian embassy site off Forster Crescent in Yarralumla. Photo: James Coleman.
Russia has lost its bid to retain a block of land in Yarralumla for the eventual construction of a new embassy, but Australia will have to compensate it and pay its legal costs.
The High Court rejected arguments from lawyers for the Russian Federation that the Albanese Government’s Home Affairs Act 2023 to terminate the lease on national security grounds was invalid because it did not amount to a purpose under Section 51 of the Constitution.
Their fallback position was that if it did, then Russia was owed compensation under the “just terms” application of s 51.
Russia acquired the lease to the 11,526 sqm block near Parliament House in 2008, paying $2.75 million and fees upfront.
But it failed to make good on its intentions to build a new embassy, and in 2022, the National Capital Authority, which manages the diplomatic estate, cancelled the lease.
Russia, which has an existing embassy operating in Griffith, took the NCA to the Federal Court, where they agreed to keep the lease alive.
But in 2023, the Federal Government passed legislation terminating the lease.
Prime Minister Anthony Albanese said the government had “received very clear security advice as to the risk presented by a new Russian presence so close to Parliament House”.
According to the four-Justice majority, the determinative issue was whether termination of the lease under s 5 of the Act was properly characterised as having resulted in an acquisition of property within the meaning and scope of s 51(xxxi) of the Constitution.
“If so, the Act is a valid exercise of the legislative power conferred by s 51(xxxi) to enact a law with respect to the acquisition of property on just terms for a purpose in respect of which the Parliament has power to make laws under s 122 of the Constitution, and the Commonwealth is liable to pay compensation to the Russian Federation under s 6 of the Act,” they said.
“If not, the Act is a valid exercise of the legislative power conferred by s 122 and the statutory entitlement to compensation is not enlivened.”
A map showing the proximity of the site to Parliament House. Image: Google Earth.
The majority concluded that termination of the lease was within the meaning and scope of s 51(xxxi) of the Constitution.
“The acquisition was for a purpose for which the Commonwealth Parliament has power to make laws under s 122 of the Constitution,” it said.
“The Act is therefore valid and the Commonwealth is therefore liable to pay compensation to the Russian Federation under the Act.”
The Commonwealth argued that the granting of “just terms” to the Russian Federation for termination of the Lease would be “incongruous”, given that the object of the Act was to protect from a risk to national security arising from the Russian Federation’s continuing occupation and use of the land.
“How could it be consistent or congruent with fair dealing between the Australian nation and the Russian Federation for the Australian taxpayer to be required to compensate the Russian Federation for preventing it from using National Land in a way that the Commonwealth Parliament was satisfied posed a risk to the national security of Australia?” the judgment asked rhetorically.
However, it stated that the lease was granted by the Commonwealth and paid for by the Russian Federation in accordance with Australian domestic law, and that the use or potential use of the land by the Russian Federation had not been suggested to involve a breach of any term of the lease or contravention of any domestic legal norm.
“As senior counsel for the Russian Federation aptly submitted, the legal position of the Russian Federation for the purposes of s 51(xxxi) of the Constitution is in those circumstances no different in principle from the legal position of an Australian citizen whose lawful occupation of land is terminated by operation of a Commonwealth law the object of which is to create a security zone around a defence establishment,” the majority said.
They stated that compensating the Russian Federation would not undermine the legislation’s goal of protecting national security.
“To provide just terms to the Russian Federation for the acquisition of its property in those circumstances is not an inconsistent or incongruous notion,” the majority said.
“To the contrary, it is what the Constitution requires.”
Two other High Court justices agreed with the majority but handed down a separate judgment. One also agreed but differed on costs, saying the Russian Federation should receive half.
