Russia has taken an Australian government agency to court over the termination of its lease for a new embassy in Canberra.
In 2011, the Russian government was granted approval to build an embassy to replace its ageing facility in the ACT suburb of Griffith.
However, Australia's National Capital Authority (NCA) terminated the lease in August, citing Russia's failure to finish construction before an agreed three-year deadline.
The matter was heard in the Federal Court on Thursday, where the Russian Federation's legal representative, Elliot Hyde, argued the cancellation of the lease was invalid.
Mr Hyde said the lease terms were met because a consular building had been built on the site, though he conceded that the embassy remained unfinished.
The Australian government's representative, David Robertson, argued the entire complex needed to be completed to meet the lease requirements.
Mr Robertson told the court that even if Russia's argument was correct, the sole building on the site was not technically finished because it did not meet the specifications required for planning approvals.
When the discussion turned to how long the parties needed to deliver documents to the court, Mr Hyde said the matter must be dealt with quickly because a key witness, Russian ambassador Alexey Pavlovsky, may soon be expelled from Australia.
Foreign Minister Penny Wong said last month Australia was considering expelling Mr Pavlovsky over Russia's nuclear threats against Ukraine, which it invaded in February and continues to occupy.
'Use it or lose it' policy
When the NCA announced the lease termination, it said Russia had 20 days to clear the site.
However, the court heard on Thursday that the NCA had agreed to allow Russia to use the land until the legal dispute was finalised.
NCA chief executive Sally Barnes said in her lease decision that Russia had taken too long to fulfil its agreement on what was prime land.
"The block is a premium site in central Canberra, close to Lake Burley Griffin and the Australian Parliament House," she said.
"Ongoing unfinished works detract from the overall aesthetic, importance and dignity of the area.
"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"."
