Key Points
- ASX-listed company Tigers Realm Coal appeared in the Federal Court challenging the application of sanctions on its operations in Russia.
- In April 2023, DFAT provided the company with an indicative assessment that its operations were against Russia sanctions guidelines.
- Tigers Realm Coal has been mining coking coal in Russia since 2017 on one of its two exploration sites and selling it to Asian markets.
Following Russia’s invasion of Ukraine in February 2022, the Australian government introduced and entities, while also banning the export and import of a number of goods to and from Russia.
However, two years later, on 4 March 2024, an interpretation of the current sanctions law was a matter of dispute at a Federal Court hearing. On the one side: the Commonwealth; and on the other: Tigers Realm Coal, an Australian public company mining coking coal in Russia and selling it to Asian markets.
, it is prohibited to import, purchase or transport a range of goods, including coal, if they originated in Russia.
The coal miner's lawyer argued in court that the Australian sanctions, did not apply to its activities in Russia, as it only produced coal, but didn't transport it across borders. The Commonwealth insisted in response, that the main attention should not be on the definition of the term "transport", but on the purpose of the law, which is to sanction the Russian government, the key beneficiary of the transaction.
Mining and selling Russian coal
Tigers Realm is an Australian company which has been mining coking coal in Russia and selling it to Asian markets since 2017. All of its operations are , where the company holds two exploration licences.
Investors of the company , which is owned by the Russian government. The fund and its CEO, Kirill Dmitriev, .
At the end of February 2024, Tigers Realm for the calendar year of 2023 — a 13 per cent fall in comparison to 2022.
In April 2023, that Tiger Realm’s operations may be in breach of Australia’s sanctions laws.
The company refuted that claim and, in late June 2023, that it had filed a court case seeking to prove that its operations in Russia were not in breach of sanctions.
Definition of 'transport' challenged
Representing Tigers Realm in the Federal Court, Christopher Ward, SC, stated that the company was not in breach of sanctions, as the regulations did not cover "production", but only "import" or "transport" of coal.
He argued at the court hearing that his client produced coal and transported it within Russia from mine to port, where the ownership ended, while the sanctions regulations targeted cross-border transport.
The Court heard that DFAT’s interpretation of "transport" was too broad, and that "an Australian citizen using coal produced in Russia to heat his apartment in Moscow" would also then be captured by the same regulations.
Representing the Commonwealth, Perry Herzfeld, SC, responded by saying that instead of this “terrifying” example, the Court should consider another one: an Australian company mining Russian coal and selling it abroad, and paying taxes to the Russian government from that.
Herzfeld argued that Tigers Realm activities did fall under sanctions regulations, as it transported coal within Russia with a purpose of further export abroad.
He added that the transport of coal within Russia should not be seen as part of production and suggested that Tigers Realm was introducing “fuzzy lines” in the interpretation.
Inhibiting that transport, he continued, tended to inhibit the trade of Russian coal — the sole intention of these sanctions.
At the hearing, Tigers Realm's representatives admitted that if the Court found against the company, it would have to cease all of its activities.
Meanwhile, the representatives of the Commonwealth argued that if Tigers Realm's definition of “transport” was accepted by the Court, it would “leave a hole in relation to what the regulations can achieve”.
Justice Geoffrey Kennett adjourned the hearing.
