Russia wins battle to retain Yarralumla site for new embassy

The National Capital Authority has failed in its attempt to take back land leased to Russia to develop a new embassy in Yarralumla.

The move prompted a legal challenge and the NCA has backed down, with the federal court issuing orders on Wednesday (31 May).

The court declared that the NCA’s notice to terminate the lease last year was invalid and had no effect.

It also ruled that the NCA could not re-enter to take possession of the land (Block 26 Section 44) or interfere with the Russian Embassy’s quiet enjoyment of the land.

The orders were made with the consent of the parties following a settlement of the case.

The NCA said the court orders brought the matter to an end and the status quo would be maintained on the Yarralumla site.

“The Government of the Russian Federation (GRF) will retain its lease over the land. As such, any questions about the site are best answered by GRF,” it said.

The Russian Embassy said work on the new embassy building would resume on the site.

“The Embassy is committed to resume works on the site and timely complete the construction,” a statement said.

The NCA moved against the Russian lease last August, saying its decision to terminate the lease was based on “absence of a commitment to a completion date” after years of talks with Russian representatives about the lack of progress on the site.

The decision further strained relations between Russia and Australia, given Australia’s support for Ukraine following Russia’s invasion.

The lease was originally granted in December 2008, with the works and building approvals approved in 2011.

The NCA, which manages diplomatic land in Canberra, said the Russian Federation had agreed to finish construction within three years, but apart from some preliminary works the site remained largely undeveloped.

NCA chief executive Sally Barnes said at the time the leased land was a “premium site”.

“Ongoing unfinished works detract from the overall aesthetic, importance and dignity of the area reserved for diplomatic missions and foreign representation in the National Capital,” she said.

“With limited blocks currently available for diplomatic purposes, unless a country can demonstrate a willingness and ability to develop the site, the NCA supports a policy of ‘use it or lose it’.

“While initial works have commenced, the block in question has been sitting as a building site with unfinished construction for many years now.”

The ‘use it or lose it’ policy was a recommendation in a 2013 report Estate for the Future by the Joint Standing Committee on the National Capital and External Territories, which investigated the allocation of land to diplomatic missions in the ACT.

The Russian Embassy said at the time that the NCA’s move was “puzzling” and “unprecedented and highly unwelcome move”.

It conceded the project had encountered “multiple problems and delays”, but these had been dealt with as a “matter of constructive and frank consultations between the embassy and the NCA”.

“It is really puzzling why the NCA chose to terminate the lease now that the construction process at Yarralumla site has been steadily going on uninterrupted for the last two-plus years, with results already very much visible and prospects rather clear.”

Adding spice to the dispute was the Ukrainian Ambassador’s interest in his country acquiring the site for a new embassy.