Hopes of a negotiated settlement between the Russian embassy and the National Capital Authority have faded: Russia has formally gone to court to sue the NCA after the planning authority withdrew Russia's lease on the the site for a new embassy.
Russia said in a statement that its legal advice was that the NCA's move "may have been unlawful".
A statement from the embassy on the weekend said: "We take this opportunity to comment on the Federal Court proceedings filed by the Russian Embassy in Australia this week against the Commonwealth of Australia and the National Capital Authority (NCA). Upon receiving legal advice the Embassy has chosen to challenge the validity of the notice of termination of lease of Block 26 Section 44 in Yarralumla.
"We have a long history of working closely with the NCA over the years and were saddened to be notified of the NCA's decision to terminate the lease, a decision we have been advised may have been unlawful."
The statement added: "The Russian Embassy in Australia is committed to the completion of the embassy complex on the site in accordance with the lease and approved plans. The embassy has all necessary finances and approvals in place, and pending the successful outcome of the Court proceedings is ready to complete the construction in a reasonable time period."
Last week, the National Capital Authority pulled back from enforcing a deadline for Russia to clear land allocated for its new embassy. The hope was that the two sides could reach a settlement without going to court.
But that hope has now gone.
The NCA controls building permits in the parliamentary zone. It first gave permission to the Russian federation for a new embassy on Block 26 Section 44 in 2008, with building approvals on March 31, 2011 and September 23, 2011.
But more than 10 years later, the land remains as little more than a field with a security hut on one side and material scattered around it.
When Russia was given the "termination" notice three weeks ago, a spokesman conceded that "the building project had indeed encountered multiple problems and delays through several years", but said "at all times, these were 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," the spokesman said.
Russian diplomats are continuing to operate from the embassy on Canberra Avenue.
The ostensible reason for the NCA's blocking of the new compound was that it hadn't been completed within the three years allotted. The NCA said the invasion of Ukraine had nothing to do with it: "This is an independent issue, with the decision to terminate the lease based solely on Russia not complying with the lease agreement."
The embassy conceded the new building had been dogged with problems. At one stage, the federal government said Russian workers would not be allowed in to work on it.
The existing embassy on Canberra Avenue has had a colourful history of espionage in the Cold War. The most famous event was the defection of the third secretary at what was then the Soviet Embassy. The Petrov Affair became one of the great dramas and intrigues of Australian politics.
It continues to attract controversy. Every Saturday, pro-Ukrainian protesters gather outside and encourage passing drivers to honk their horns in support many do.
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