Russia has failed in a high court bid to build a new embassy in Canberra , but the federal government will have to pay compensation for cancelling its lease, and cover the costs of the case.

The high court ruled in a majority decision that it was legal for the lease to be cancelled in 2023.

But it found that Russia should be compensated after the 99-year lease signed in 2008 for $2.75m was cancelled.

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Lawyers for the Russian federation had described the compensation bid as its “fallback case” if it was prevented from building a new embassy on the site .

The court noted in its decision that Anthony Albanese said in cancelling the lease the government had “received very clear security advice as to the risk presented by a new Russian presence so close

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