Legal development

Unscrambling sanctions: Federal Court guidance on Australia's sanctions regime

corridor with lights

    What you need to know

    • The Federal Court has considered in detail the application of Australia's sanctions regime to exports and related services.
    • The judgment will help to guide the development of effective contractual protections against sanctions exposure.

    What you need to do

    • Australian businesses and compliance professionals should assess and update their risk and compliance strategies in response to new signposts from the Federal Court.
    • Careful drafting of contractual exclusions, relief and remedies remains a top priority for sanctions risk mitigation.

    In Tigers Realm Coal Limited v Commonwealth of Australia [2024] FCA 340, the Federal Court provides judicial guidance on the application of the Autonomous Sanctions Regulations 2011 (Cth) (Sanctions Regulations) and Autonomous Sanctions Act 2011 (Cth) (Sanctions Act) (together, the Sanctions).

    While there have only been a small number of instances of criminal enforcement of Australia's sanctions regime, we are beginning to see more civil cases testing the limits of the operation and effects of that regime. The Tigers Realm decision is the most recent example, following Deripaska v Minister for Foreign Affairs [2024] FCA 62 (a case which considered the constitutional validity of the regime) and Alumina and Bauxite Company Ltd v Queensland Alumina Ltd [2024] FCA 43 (a case which considered the consequences where performance of a contract would cause a breach of Australian sanctions).


    Tigers Realm, an Australian listed company, sought declarations that the operations of its Russian subsidiary coal mining companies were activities which did not constitute "sanctioned imports" as defined by the Sanctions. These operations included extraction of coal at the mine, transporting and stockpiling the coal at the port and other activities ahead of export of the coal from Russia.

    The Court held that the word "transports" in reg 4A(1)(a)(ii) has its ordinary meaning, that transporting coal from a Russian mine to a Russian port met the definition in the Sanctions Regulation, and accordingly that the operations constituted "sanctioned imports".


    Three of Tigers Realm's wholly owned subsidiaries, each incorporated in Russia, were involved in extracting and producing coal in an area on Russia's East Coast. The Russian subsidiaries' operations included extraction of coal at the mine, transportation by truck to the port, stockpiling at the port and various other further operations before the coal was loaded onto ships for export. The coal produced by the Russian subsidiaries was then sold to the Asian market, and was not exported to Australia.

    On 10 March 2022, the Minister for Foreign Affairs made the Autonomous Sanctions (Import Sanctioned Goods – Russia) Designation 2022 (Cth) (Russia Designation 2022), designating coal, and certain fuels made from coal, as "import sanctioned goods" for Russia under reg 4A(3) of the sanctions regulations. This case concerned the effect of the Russia Designation 2022 on the operations of Tigers Realm's Russian subsidiaries.

    On 3 November 2022, following discussions between Tigers Realm's solicitors and the Department of Foreign Affairs and Trade (DFAT), Tigers Realm applied to DFAT for an "Indicative Assessment" of whether it might be affected by Australia's sanctions regime. DFAT's Indicative Assessment was that the Russian subsidiaries' operations were "likely to be prohibited by or subject to authorisation under, regulation 4A".

    Tigers Realm then commenced proceedings in the Federal Court seeking declarations that:

    1. Regulation 4A(1)(a)(ii) of Australia's sanctions regulations does not apply to the movement of coal by the Russian subsidiaries within Russia where that movement of coal was preparatory to the export of the coal from Russia;
    2. the following activities were not "transport" within the meaning of reg 4A(1)(a)(ii) of the sanctions regulations: carriage of coal at the mine site; carriage of coal from the mine to the port; and the loading of coal at the port on to independently-owned vessels for the purpose of export.

    Sanctions Regulations

    The two regulations the Court considered in detail were regs 4A and 12A of the Sanctions Regulations, which concern sanctioned imports, and prohibitions relating to sanctioned imports, respectively.

    Under reg 4A, a person makes a sanctioned import if the person imports, purchases, or transports goods that are designated import sanction goods. Import sanction goods are those either listed in reg 4A(2) or under reg 4A(3) where declared by the Minister. Russian coal was designated as an import sanctioned good by the Minister on 10 March 2022.

    Under reg 12A, a person contravenes the regulation if they make a sanctioned import which, in the case of a body corporate, can include where the first body corporate has effective control over the second body corporate, wherever incorporated in the world, who makes the relevant sanctioned import.

    When are goods "transported"?

    Tigers Realm argued that as reg 4A was concerned with "sanctioned imports," the word "transports" should be read down to mean that the goods in question had been "exported from" their country of origin. i.e. the transport of goods can only amount to a sanctioned import once those goods are transported across a national border.

    The Court rejected this argument. It held that the word transports should be given its ordinary meaning and would therefore cover the movement of coal within Russia. In coming to this view, the Court noted that regs 4A and 12A are both concerned with limiting a country's ability to benefit from the goods it produces and should not be read down only to apply to goods that are imported into another country.

    Key takeaways

    The Court's decision confirms that transportation of sanctioned goods by an Australian company or its subsidiaries, within a third country, may breach Australian sanctions laws.

    More broadly, it demonstrates that the Court will give words in Australia's sanctions laws and regulations their ordinary meaning, and will construe those laws consistently with the Government's underlying public policy relating to those sanctions.

    The Court's decision is one of a growing number of Australian cases considering the operation and/or effect of Australia's sanctions regime. These cases offer useful judicial guidance on the construction and operation of aspects of the regime and should be taken into account as businesses assess their exposure to (and how to mitigate the impact of) that regime.

    For more information about Australia's sanctions regime, please refer to our earlier publication "Heightened focus on Australian sanctions"; and our Russian sanctions tracker.

    Authors: Rani John, Partner; James Clarke, Partner; George Barlin, Associate; and Michael Deighton-Smith, Associate.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


    Stay ahead with our business insights, updates and podcasts

    Sign-up to select your areas of interest