Rio Tinto wins legal battle against another leading aluminium powerhouse

In a landmark decision, the Federal Court upheld Rio Tinto's discernment in navigating the complex web of international sanctions in 2022. The esteemed court, presided over by Justice Michael O'Bryan, dismissed claims made by subsidiaries of a Leading Russian Aluminium Producer, challenging Rio's refusal to continue collaboration.

In 2022, amidst the geopolitical upheaval following Russia's invasion of Ukraine, Rio Tinto demonstrated sagacity by severing ties with the Russian aluminium producer's subsidiaries, holding a 20% stake in Queensland Alumina Limited (QAL). This strategic move encompassed halting the supply of bauxite and alumina to the Russian giant, ultimately invoking emergency step-in rights to prevent any economic benefit from flowing to the sanctioned entities.

Legal backing for Rio's decision: Justice O'Bryan's verdict

Justice O'Bryan, in a meticulous judgment, endorsed Rio Tinto's actions. He cited the common law principle of supervening illegality, where contractual obligations are nullified due to a change in the law. The judge also emphasized Art 17 of the Tolling Contracts, providing a robust defence for Rio against claims of breach of contract.

"I have found that the production of alumina by QAL for ABC [Russian aluminium producer] and the delivery of the alumina to ABC [Russian aluminium producer] would have been contrary to the designated person sanction because, by operating the Gladstone plant pursuant to the contractual arrangements governing the Gladstone alumina joint venture, QAL indirectly makes the Gladstone plant available for the benefit of Messrs Deripaska and Vekselberg," Justice O'Bryan illustrated in great detail.

Contrary production and trading Benefits: Legal insights

Justice O'Bryan elucidated that the production and delivery of alumina to the Russian aluminium giant would have violated the designated person's sanction. The intricate contractual arrangements governing the Gladstone alumina joint venture conferred benefits to the sanctioned individuals indirectly, compromising the intended impact of the sanctions.

Rio Tinto's resolute stance, validated by the Federal Court, showcases the delicate balancing act required when navigating international sanctions. This legal triumph not only safeguards Rio's interests but also underscores the industry's commitment to adhering to legal and diplomatic protocols, ensuring a robust and principled business environment.

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