When Power Shifts Suddenly: What the Russian Federation Lease Case Teaches About Cost Risk
Home › Case Studies › Case Law Library › International & Cross-Border Cases › Constitutional law › Government of the Russian Federation v Commonwealth of Australia [2025] HCA 44
Published: 19 November 2025 | Reviewed: 19 November 2025
(3-minute read)
How constitutional acquisition law sheds light on the Hidden cost pressures clients face when disputes escalate
In Government of the Russian Federation v Commonwealth of Australia [2025] HCA 44, the High Court examined whether the Home Affairs Act 2023 (Cth) validly terminated a 99-year diplomatic lease in Yarralumla, and whether doing so triggered the constitutional requirement of just terms compensation under s 51(xxxi) of the Constitution.
The Act extinguished the lease by force of the section upon commencement. As the Court put it at [5]:
Termination of the Lease extinguished the leasehold estate of the Russian Federation … and enlarged the reversionary interest of the Commonwealth.
Four central findings followed:
The Act was supported by s 122 (the territories power).
Because the land was located within the ACT, the law had the necessary territorial connection.Termination amounted to an acquisition of property.
Ending the lease removed the lessee’s proprietary interest and correspondingly increased the Commonwealth’s estate.Just-terms compensation was required and payable.
Section 6 of the Act applied because the termination operated as an acquisition.Political context was irrelevant.
The Court noted public statements but focused strictly on the legal character of the statute.
The case reinforces a recurring constitutional principle: when Parliament reallocates rights in land, even for national security reasons, the shift must still comply with the constitutional structure governing fair dealing and compensation.
Why It Still Matters -
modern relevance and power dynamics
The judgment shows how quickly a seemingly stable legal interest can be overtaken by legislative change. Even when the parties are governments, the deeper lesson is universal: rights can shift abruptly, and when they do, disputes often move onto two tracks at once - negotiation on one side, and preparation for litigation on the other.
For businesses and individuals, the risk exposed here is not geopolitical. It is structural. When the law changes unexpectedly, parties are drawn into prolonged, technical disputes. In standard practice, clients then face a compound financial pressure: they pay for settlement efforts and simultaneous trial preparation, even though only one path will ultimately proceed.
This case illustrates how legal uncertainty multiplies cost. The underlying constitutional issue was highly specific, yet the pattern is common: when disputes escalate, conventional fee models quietly double the financial load.
How to Avoid the Same Trap -
the role of cost alignment
The Clean Law safeguard most responsive to the risk highlighted by this judgment is cost alignment through one-path funding. When a dispute becomes complex, clients often fund both possible futures at once. Traditional models do not separate the settlement path from the trial path, leading to duplicated work and avoidable cost.
Clean Law is designed to prevent that duplication. The courtroom lawyer prepares and runs the litigation. Clean Law focuses exclusively on settlement, timing, budgeting, and strategy. Because the two roles are structurally divided, the client funds only the path being pursued.
Two lawyers often cost less than one - because you fund one path, not both.
This safeguard works because it is structural, not behavioural:
settlement work is capped within a fixed-fee framework
trial work is handled separately
escrow ensures each new stage is consciously approved
delay does not generate revenue for Clean Law
In disputes where the legal landscape changes, as it did for the parties in this case, the risk is not simply the uncertainty of outcome. It is the financial drain of being billed for two parallel strategies. Clean Law’s structure is built to contain this. Fixed-fee oversight and escrow approvals mean every step is visible and authorised, and clients avoid the silent cost spiral that often arises when matters drag on for months or years.
The constitutional principles in Russian Federation v Commonwealth exist to prevent one party’s rights being diminished without fair dealing. The Clean Law cost-alignment safeguard exists to prevent clients’ financial exposure from expanding simply because legal uncertainty has increased.
Reflection
This case reminds us that when power moves suddenly, cost and time pressures can escalate just as quickly. While constitutional litigation plays out on a national scale, the same pressures are felt by individuals and businesses facing unexpected disputes. Clean structures, one path at a time, fixed fees, and escrow control, help contain those pressures before they become unmanageable.
To see how one-path funding avoids the common problem of duplicated work during uncertain or escalating disputes, the following explainer walks through the structure in plain language.
Explore how cost alignment protects clients from funding two paths
Where a dispute involves significant financial exposure or sudden changes in legal rights, independent early advice helps clients map options with clarity.
Book a confidential discussion with an independent Clean Law solicitor
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
