Earlier this year at trial,
The decision has broad ramifications for Australian businesses and transporters. Firstly, the decision confirms that
The Australian sanctions regime
As the Federal Court noted recently in Deripaska v Minister for Foreign Affairs [2024]
The Australian sanctions regime recognises and implements
Relevantly, regulation 12A of the Sanctions Regulations prohibits the making of a 'sanctioned import'. Under the Autonomous Sanctions (Import Sanctioned Goods-Russia) Designation 2022 (Cth), coal and certain fuels made from coal have been so designated.
As per regulation 4A of the Sanctions Regulations, "a person makes a sanctioned import if:
-
the person:
- imports or purchases goods from another person; or
- transports goods; and
- the goods are import sanctioned goods...".
- the Criminal Code 1995 (Cth) extends the application of the sanctions prohibitions to conduct by an Australian company even when wholly outside
Australia -
the breadth of the Australian sanctions regime "is a question of public policy closely connected with the conduct of
Australia's foreign relations".
Severe penalties exist for breaching the Australian sanctions regime, the most notable being extended periods of imprisonment for individuals and fines of over
Background
Tigers Realm is an ASX listed Australian company. It is the sole owner of three Russian subsidiaries, which it uses for coal extraction and production on the east coast of
Notably, this coal was not intended for export to
In
Following these discissions, in
The issue
Tigers Realm challenged DFAT's Indicative Assessment in the Federal Court, arguing that the phrase 'transports' did not include the movement of coal by their Russian subsidiaries within
The decision
In dismissing Tigers Realm's challenge, the Court considered the proper construction of the term 'transports' in the Sanctions Regulations, holding that:
"It is not in doubt that, read according to its ordinary meaning, the expression 'transports' encompasses the activity of the Russian subsidiaries in taking the coal by truck from the mine to the port... [and] the carriage of coal by barge from the shore to the ship".
Tigers Realms argued that given that the Sanctions Regulations prohibited 'transport' in the context of 'sanctioned imports', the relevant form of transport that was prohibited was only import transport and not any prior domestic transport or repositioning. However, this argument was rejected with the Court saying:
"'transports' is not to be given a meaning that is tied to 'imports'... simply because it appears as part of the definition of 'sanctioned import'".
Tigers Realm also argued that the broad application of the sanctions regime would be draconian, contending that "any Australian citizen, Australian body corporate or Australian-controlled corporation, anywhere in the world, would contravene reg 12A(1) and be liable to prosecution if, without authorisation, it transported Russian coal (or any other import sanctioned goods)".
The Federal Court rejected this argument, noting that such broad application was indeed the intended effect of the sanctions regime, insofar as:
Despite confirming the broad application of the Australian sanctions regime, the Court did recognise certain limits regarding the meaning of 'transports', providing that the mere handling of goods owned by a business, including loading them prior to transport, does not constitute prohibited transport under the regime.
Key takeaways
This decision follows an increasing focus on the importance of the Australian sanctions regime to Australian businesses (see in particular our recent articles on the ' Six things businesses need to know about
In upholding DFAT's Indicative Assessment, the Federal Court has provided clear and unambiguous support for the proposition that a broad spectrum of transport activities, including those occurring wholly outside
Going forward, the Commonwealth has indicated that it is considering further compliance activity against Tigers Realm, including a potential prosecution.
This case shows that Australian sanctions authorities are actively monitoring sanctioned activities, including those that occur overseas, and will take enforcement steps to ensure that
If you have any questions about
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
Mr
Holding Redlich
Level 65
NSW
2000
Tel: 39321 9999
Fax: 39321 9900
E-mail: inquiries@holdingredlich.com.au
URL: www.holdingredlich.com.au
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