Recently, the Federal Court of Australia handed down its judgment in Tigers Realm Coal Limited v Commonwealth of Australia [2024] FCA 340, considering the interpretation of the word ‘transport’ in regulation 4A of the Autonomous Sanctions Regulations 2011 (Cth) (the Regulations).
This decision marks yet another recent decision by the Federal Court of Australia regarding Australia’s autonomous sanctions regime. For our further updates on other recent decisions, see Federal Court Decisions prompt legislative changes and Alumina and Bauxite Company v Queensland Alumina Ltd.
Background
The applicant, Tigers Realm Coal Limited, is an Australian listed company with three Russian subsidiaries. The Russian subsidiaries extract and produce coal in an area on Russia’s east coast at a mine and port. The coal that is produced is extracted from the ground at the mine, transported by truck to the port and stockpiled at the port before being loaded on to ships for export. The coal produced is sold in Asia and is not exported to Australia.
On 10 March 2022, the Minister for Foreign Affairs made the Autonomous Sanctions (Import Sanctioned Goods – Russia) Designation 2022 (Cth) (Designation), designating coal and other fuels made from coal as “import sanctioned goods” for Russia under regulation 4A(3) of the Regulations. In November 2022, the applicant made an application for an Indicative Assessment as to whether the applicant was affected by the Designation.
In March 2023, the Department of Foreign Affairs (DFAT) made an Indicative Assessment that the applicant’s operations were “likely to be prohibited by, or subject to authorisation” under regulation 4A. The applicant sought declaratory relief to establish whether the activities of its Russian subsidiaries contravene regulation 12A, which prohibits the making of a “sanctioned import”.
Under regulation 12A, a person makes a sanctioned import if the person imports, purchases or transports goods from another person where the goods are import sanctioned goods for a country or part of a country. There was no dispute that coal is an import sanctioned good for Russia under an instrument made under regulation 4A(3). However, since the coal is transported by the Russian subsidiaries from the mine to the port only in Russia, the Court was tasked with determining whether the operations constitute “transporting” goods within the meaning of regulation 4A(1)(a)(ii).
The applicant’s key contention was that a person may “transport” import sanctioned goods if they carry or import them across borders. That is, goods are not “transported” within the meaning of regulation 4A(1)(a)(ii) simply by transporting them within a country. The Commonwealth argued that the concept of a “sanctioned import” does not require movement of goods between countries – this submission was ultimately accepted by the Court.
Decision
In dismissing the application, the Court made the following key findings:
- The word “transports” is distinct from “imports”. The fact that the word “transports” was included separately in regulation 4A(1)(a) indicates that “transports” was “clearly intended to add something; and it would not add much if the only activities of transport captured were those associated with or connected with importation (given that the importation of goods necessarily involves transporting them)”.[1]
- Regulation 4A(2) contemplates goods being “exported from”, or originating in, part of a country. In principle, goods transferred to or for use in part of a country may come from another part of the same country.
- Reg 4(1) includes in the definition of a “sanctioned supply” the “transfer” of goods “to”, “for use in” or “for the benefit of” a country, which evidences a deliberate decision to extend the concept of a “sanctioned supply” beyond the physical transfer of goods into the country. The Court accepted that regulations 4 and 12 are concerned with restricting the supply of identified goods to (or for the benefit of) a country that is subject to sanctions, whereas regulations 4A and 12A are concerned with “limiting a country’s ability to benefit from trade in goods that it produces”.
- “Transports” has its ordinary meaning, which gives the prohibition a far-reaching operation. Any Australian citizen or body corporate, anywhere in the world, would contravene regulation 12A if it transported an “import sanctioned good” anywhere in the world. Notably, the Court did not consider that the ordinary meaning of “transports” extends to any movement of goods brought about by human agency e.g. when a person is carrying around goods within their own premises, or loading goods on to a truck, train or barge (which is preliminary to transporting).
- These features supported the Commonwealth’s position that the concept of a sanctioned import does not require movement between countries.
Accordingly, the activities of the Russian subsidiaries were found to involve “sanctioned imports” as defined in reg 4A.
[1] Tigers Realm Coal Limited v Commonwealth of Australia [2024] FCA 340 at [36]
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