The High Court of Australia on Monday dismissed a request for an injunction that would have prevented Russia from being evicted from a site where it plans to build a new embassy in the capital, Canberra.
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Australia had blocked Russia from building a new embassy at the site after intelligence agencies warned it could be used as a base to spy on lawmakers.
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High Court Justice Jayne Jagot said that Moscow's challenge was "weak" and "difficult to understand."
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Last week, the Russian Embassy launched an injunction to temporarily hold onto the land.
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The embassy said it had "no comments" on the Monday ruling.
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Russia bought the lease to the land from the Australian government in 2008 and was granted approval to build its new embassy there in 2011.
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The Australian government announced last week that it was canceling the lease, with parliament passing a law preventing a Russian embassy from being built on the site.
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The site is located close to Australia's parliament.
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Media had reported that a Russian diplomat was squatting at the site. Russia's lawyer, Elliot Hayde, said the man was a security guard.
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"The government has received very clear security advice as to the risk posed by a new Russian presence so close to Parliament House," Australian Prime Minister Anthony Albanese said.
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"We are acting quickly to ensure the lease site does not become a formal diplomatic presence."
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Russia currently has an embassy in the Canberra suburb of Griffith, which is located further away from Parliament House.
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