AUSTRALIA Trends and Developments Contributed by: Dennis Miralis and Jack Dennis, Nyman Gibson Miralis
Australia has announced that its decision to partici - pate in the MSMT is driven by the need to address North Korea’s ongoing pursuit of weapons of mass destruction and malicious cyber activities. Alumina Decision: Sweeping Scope of Sanctions A long-standing issue in terms of the Australian sanc - tions regime has been understanding the scope of targeted financial sanctions. This has been identified as a strong issue of concern in need of regulatory and potentially legislative clarification. One of the most important legal developments in the Australian sanctions landscape is the landmark judicial guidance provided by the Federal Court of Australia in Alumina and Bauxite Company Ltd v Queensland Alumina Ltd (2024) FCA 43 (“Alumina”). The case con - cerned the permissibility of the supply parties relying on the force majeure provisions to terminate the sup - ply arrangement early in light of Australian sanctions against Russia. For the sake of brevity, certain Australian sanctions offences may be triggered where the designated per - son or country receives a benefit or good as a “direct or indirect” result of someone supplying a good/ service to the person, country, or a third party (see Regulations 4, 12 and 14). There was (and remains) no legislative or regulatory guidance on how to interpret “direct or indirect”. According to the Alumina decision, whether the goods immediately result in – or eventually (no matter the additional steps or actions in the supply chain) result in – the good or benefit to the designated person or country, there would be an offence. In doing so, the court openly acknowledged that there was the “pos - sibility that a person may engage in a transaction that initially is not a sanctioned supply, but which subse - quently becomes a sanctioned supply” due to “events that occur after the transaction has been undertaken”. This decision was affirmed by the Full Federal Court of Australia dismissing Alumina and Bauxite Company Ltd’s appeal in November 2024. The Court once more expressly recognised that “at the time of the supply, sale or transfer in para (a), it may not be possible to
determine whether or not the supply, sale or transfer is a ‘sanctioned supply’”. Of course, one should be able to avoid penalties under the sanctions regime if any supplier obtains a permit for their operations or if a (body corporate) sup - plier takes reasonable precautions and exercises due diligence at the time the initial supply is made, or even if a (individual) supplier makes the initial supply while mistaken as to a relevant fact (eg, they are deceived about who is the end user). The Full Federal Court acknowledged that this finding “may seem surprising at first blush”; however, the “potential harshness… is ameliorated” by these aforementioned factors. Nevertheless, suppliers are still left without a clear idea of the scope of the laws and possible offences and are at the mercy of the regulatory body in terms of enforcement action. This not only impacts liability under criminal and corporate law but also obligations under contract. Where suppliers are investigated by the ASO in respect of their compliance, they will be significantly reliant upon: • their best efforts regarding due diligence and com - pliance programmes; • their ability to obtain and follow (in a technical sense) permits, which may also have interpretation issues; and • as a last resort, the ASO’s discretion to avoid the cost and time of an investigation (and perhaps trial) in such scenarios. This serves as a warning for all suppliers who are sub - ject to Australian sanctions law on the importance not only of undertaking reasonable precautions and due diligence in their business operations, including apply - ing and obtaining a permit where there is any identi - fied risk, but also of the need to always ensure force majeure clauses can properly respond to changes in sanctions law. Permits in Practice Publication but continued limited use An important non-legislative development is in the publication of general permits. Since the inception
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