“Why is the transport of coal on barges to the ships … part of the process of production?” Herzfeld said. “With the truck movement between the mine and the port, why is that part of the process of production?”

“To say that this is all part of a process of production really conceals the incredibly fuzzy lines which the applicant’s construction necessarily introduces into a provision which is otherwise clear. And that lack of clarity is to be avoided.”

If Kennett finds in favour of Tigers, it potentially leaves a loophole under Australia’s sanctions laws. But if DFAT is successful in its legal bid, questions arise over whether Tigers will be held criminally responsible for continuing to mine Russian coal even after being informed by DFAT in an indicative assessment the company’s activities were likely to be in breach of Australia’s sanctions laws.

Since DFAT’s non-binding findings, Tigers has continued its operations. In an update to the market early this year, the company said it had mined 429 kilotonnes of coal in the December quarter, a 10 per cent increase compared with the previous year.

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Ward said the explanatory memorandum of the legislation expressly stated sanctions were to be “highly targeted measures”, and argued it should be implemented “with precision, not broadly and bluntly” to minimise the impact on the general population of the country.

“The closure of the mine and its cessation will be likely to have an impact upon the general population in Russia, that being something to be avoided,” Ward said.

“The workers at the mine would inevitably lose their jobs, that being something to be avoided. Neither of those are intended consequences, we say.”

Tigers’ largest shareholder – controlling 59.89 per cent of the company – is Bruce Gray, who is the non-executive director of Tigers and founder of market darling Sirtex Medical, followed by Russian private equity firm Baring Vostok Mining Holding, which owns 18.2 per cent, according to the most recent annual report published last week.

The Russian Direct Investment Fund, Moscow’s sovereign wealth fund established in 2011 by Vladimir Putin to make it easier for foreign firms to co-invest with the Kremlin in Russian companies, owns 8.41 per cent of Tigers. The fund is widely considered a slush fund for Putin and emblematic of Russia’s broader kleptocracy, with the Australian government moving to sanction its chief executive, Kirill Dmitriev, in March 2022.

Namarong Investments, whose directors include logistics billionaire Paul Little and his wife, University of Melbourne chancellor Jane Hansen, controls 5.63 per cent of Tigers.

The hearing was adjourned.

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