The country's top court has dismissed efforts by Russia to retain a new embassy site in Canberra.
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The High Court of Australia threw out attempts by Russian officials to grant an injunction against recent federal laws terminating the lease on the embassy site.
Justice Jayne Jagot said arguments made for holding onto the embassy site were weak and there was no foundation for granting the injunction.
Laws terminating the lease of the diplomatic land were passed through parliament earlier this month, citing national security risks.
A Russian diplomat has since been seen living in a shed on the site where the country was blocked from building an embassy.
Russia's embassy in the inner-south Canberra suburb of Griffith will not be affected by the decision.
The commonwealth wrote to Russian officials over the weekend saying the government would not re-lease the embassy site while the court challenge was being made.
But commonwealth lawyer Tim Begbie KC said he had heard no response.
"I do not criticise my friend for not responding to this letter. Russia has had other things on its mind over the weekend," he told the court on Monday.
Justice Jagot said while a previous attempt by the National Capital Authority to terminate the lease of the embassy was deemed invalid by a federal court, the new federal laws took precedence.
The National Capital Authority granted the lease for the Yarralumla site in December 2008 and building approvals followed in 2011.
Under the lease conditions, Russia had agreed to finish construction within three years, but the embassy remains partially built.
Lawyers for Russian officials told the court the new federal laws had "no impact on the public at large", arguing millions of dollars would have been wasted on construction on the site.
While the court dismissed the injunction made by Russian officials, it's not known if a future challenge to the overall validity of the laws will be heard.
Australian Associated Press
