Tigers Realm Coal’s legal action against the government could undermine sanctions regime if it succeeds

Legal experts say the coal miner’s challenge to Canberra could blow a hole in Australia’s anti-Russia sanctions if it succeeds.

Tigers Realm Coal’s legal challenge against the federal government anti-Russia trade measures could punch a hole in Australia’s sanctions regime if it succeeds, legal experts say.

The ASX-listed coal company, which operates coking coal mines in Russia, launched the legal action in late June after being advised by the department of Foreign Affairs and Trade that continuing to operate the mines could put the company in breach of Australia’s sanctions laws.

In court documents seen by The Australian, Tigers Realm says DFAT initially advised the company that “mining and preparation of coal at [the company’s] Amaam project coal mine in the Chukotka region of northeastern Russia, and the subsequent transport of the coal to

Beringovsky Port” is likely to be prohibited by sanctions laws and would require an exemption from Foreign Affairs Minister Penny Wong to avoid breaking Australian laws.

Tigers Realm told the market last week it had elected not to seek such an exemption, preferring to launch a legal challenge as the company does not believe its operations should be captured by the scope of the law.

The company’s court challenge is based on subsequent advice from DFAT that the transport of coal from the mine and then onto a cargo vessel for sale was likely to breach Australian laws, court documents show.

The court documents show Tigers Realm is seeking to first challenge the application of the law to its transport of goods from the mine to ports, arguing the regulations should not apply to “the movement of coal by the Russian subsidiaries within Russia where that movement of coal is preparatory to the export of the coal”; and that the carriage of coal is not “transport” within the meaning of the regulations.

But the company is also seeking to challenge the entire application of the sanctions laws to its operations, arguing the regulation DFAT says it is breaching is “invalid as being in excess of the power of the Governor-General” under Australian sanctions laws.

The Federal Court has released only the originating process in the court case to The Australian, and not more detailed documents outlining the basis of the company’s challenge.

But legal experts say Tigers Realm’s legal challenge, if it succeeds, could undermine Australian sanctions against Russia and effectively allow other Australian companies to do business with the country despite international action aimed at weakening Russia’s ability to wage war on Ukraine.

Melissa Chen, a senior lawyer at activist group the Australian Centre for International Justice, told The Australian that if Tigers Real was successful it would “significantly weaken” Australia’s sanctions against Russia.

“That’s because it would allow these activities, which risk enriching the regime through mining royalties or the like, to continue on what would have to be a very narrow reading of what transport means,” she said. “And that could be very damaging.”

Anton Moiseienko, who lectures in law at the Australian National University and is an expert on sanctions, said that if Tigers Realm succeeded it “could take the sting out of Australian sanctions”, but thought the company faced a difficult battle.

“If Tigers Realm argued that moving coal from mines to ports within Russia does not constitute ‘transport’, it would likely face a steep hill to climb,” he said.

He said the usual approach to interpreting legislation was to look at the ordinary meaning of the word, and there was nothing in the history of Australia‘s sanctions regulations “that would call for a narrower approach”.

He said the broader approach was indicated when Australia first introduced sanctions against imports in 2012, targeting Syrian and Iranian oil.

At the time, the government said the rules were intended to cover the “import, purchase or transport of Iranian and Syrian crude oil, petroleum or petrochemical products”.

“If Australian companies could engage in transporting import-sanctioned goods, they would be able to support the trade that the Australian government has decided to sanction,” he said.

“It would also make it rather more awkward to try to convince other nations to take sanctions enforcement seriously.”

Tigers Realm has also signalled it is in the process of working out a way to sell or redomicile its business to avoid breaching the sanctions, telling share­holders in late April its board was looking at potential options for a privatisation that would include a selective capital reduction “to allow certain shareholders to realise immediate value for their shares in the company”.

Originally published as Tigers Realm Coal’s legal action against the government could undermine sanctions regime if it succeeds