The Australian government has suffered an embarrassing defeat in its attempts to turf the Russian government off the site of its new embassy in Canberra.
The National Capital Authority (NCA) last year announced a decision to terminate the Russian government's lease on a block of land in the wealthy suburb of Yarralumla, where it was building its new embassy.
The decision was based on the NCA's argument that the Russian embassy had sat on the site for too long without developing it. There were also reported fears from Australian officials that Russia was attempting to use the new site to enhance its intelligence capabilities, while Russia accused Australia of attempting to thwart its attempts to guard against Australian espionage.
The federal court ordered on Wednesday that the Commonwealth's attempt to terminate the lease was "invalid and of no effect".
It restrained the respondents from re-entering the land, taking possession of the land, or interfering with the Russian government's "quiet enjoyment of the land".
The parties consented to the orders being made.
The Russian embassy said in a statement it was preparing to resume works in on the site.
"The Embassy is committed to resume works on the site and timely complete the construction," the statement said.
The Russian government bought the lease for the site in 2008 and had plans approved in 2011 but the NCA, which oversees planning and development in Canberra's diplomatic zone, said the embassy had failed to progress the works, leaving the site disused.
The NCA said diplomatic blocks were in short supply. That forced it to apply a "use it or lose it" approach to such land.
In its statement announcing the termination of the lease, it said the current site detracted "from the overall aesthetic, importance and dignity of the area reserved for diplomatic missions and foreign representation in the national capital".
A spokesperson for the embassy told the Guardian last year that its efforts to guard against Australian espionage at the new site were being frustrated.
"In today's world embassies are built to certain standards of security, including protection against espionage by the receiving country," the spokesperson said. "Without going into details - and to put it mildly - the Australian side was not eager at all to ensure that in respect of the new building of the Russian embassy in Canberra."
Ukraine had expressed an interest in acquiring the land.
The Ukrainian ambassador to Australia, Vasyl Myroshnychenko, last year signalled an intention to make a formal application to the NCA for the site once he received approval from his government.
"The Ukrainian government is renting an office space in a building for the embassy, and I don't have a residence, we've just rented a small townhouse," the ambassador told ABC radio. "That would be very nice, if we could get that plot of land."
The NCA was contacted for comment.