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Australia’s High Court ruled unanimously Tuesday that the federal government acted lawfully when it terminated Russia’s lease on land near Parliament House, but found the Commonwealth must pay compensation for the acquisition of property.
The decision ends a constitutional challenge brought by the Russian Federation over the Home Affairs Act 2023, which revoked Moscow’s access to a site 300 meters from the nation’s capital building. The case centered on whether Parliament exceeded its authority and whether the lease termination constituted a compensable property acquisition.
All seven justices determined the legislation falls within Parliament’s constitutional power to govern Australian territories. However, the court also ruled the termination resulted in an acquisition of property under Section 51 of the Constitution, requiring the Commonwealth to pay what the act describes as “a reasonable amount of compensation.”
The amount of compensation remains to be determined through negotiation or further litigation between the parties.
The Commonwealth granted the Russian government a 99-year lease in December 2008 for diplomatic and consular purposes. Russia paid a land premium of $2.75 million plus additional fees, and began construction work on the site including a building and fence, though the work remained incomplete.
On June 15, 2023, Parliament passed the Home Affairs Act hours after Prime Minister Anthony Albanese held a press conference explaining the government had “received very clear security advice as to the risk presented by a new Russian presence so close to Parliament House.”
Section 5 of the act terminated the lease immediately upon the legislation’s commencement. Section 6 included a provision acknowledging potential compensation obligations if the termination constituted a property acquisition under constitutional protections.
The Russian Federation challenged the law’s validity, arguing it was not supported by any head of constitutional power. The case proceeded as a special case with questions of law stated for the High Court’s consideration.
In its ruling issued Tuesday, the court characterized the legislation as a law “for the government of any territory” under Section 122 of the Constitution. The justices found Parliament’s territorial governance powers extended to protecting national security interests in the Australian Capital Territory, even when doing so required terminating a foreign-held lease.
The decision affirms the government’s authority to act on security concerns regarding foreign diplomatic properties near sensitive government facilities. However, the compensation requirement means the Commonwealth faces financial liability for the terminated agreement.
Legal experts say the ruling could establish precedent for future disputes involving territorial governance powers and property acquisition obligations when national security considerations intersect with foreign-held interests.
Neither the Commonwealth government nor the Russian Federation had issued formal statements in response to the ruling as of Tuesday afternoon. The parties are expected to begin discussions regarding the compensation amount, with the possibility of returning to court if an agreement cannot be reached.
The case comes amid strained Australia-Russia relations following Russia’s invasion of Ukraine and subsequent international sanctions. Australia has been among the nations most supportive of Ukraine and critical of Russian military action.
The 2008 lease was granted for purposes identified as “only for any diplomatic, consular or official purpose of the Government of the Russian Federation or for the purpose of an official residence for any accredited agent of that Government.” The 99-year term meant Russia held rights to the property through 2107 before the 2023 legislative termination.
The High Court’s statement noted the ruling should not be considered a substitute for the court’s full reasoning and should not be used in later consideration of the court’s rationale.
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