A plot of land in Australia's capital where Moscow intended to construct a new embassy was denied to Russia by the country's highest court.
In mid-June, the government terminated Russia's lease due to concerns about national security, which led to a legal challenge.
Due to its proximity to parliament—just 400 meters, or 0.25 miles—experts warned that the proposed embassy presented a spying risk.
Following the decision, a Russian diplomat who had been squatting in protest close to the site departed in an embassy car.
The current Russian embassy is located some distance from Canberra's federal parliament building.
Moscow had acquired the lease for the new location in 2008, and in 2011 it received approval to erect a new embassy there.
However, on June 15 of this year, Australia's parliament hurriedly passed new laws designed specifically to end the lease.
Australia's Prime Minister Anthony Albanese announced the laws, stating that intelligence services had provided "very clear security advice as to the risk posed by a new Russian presence so close to Parliament House.".
Dmitry Peskov, a spokesman for the Kremlin, cited Australia's decision to terminate the lease as yet another instance of the "Russophobic hysteria that is now going on in the countries of the collective West.".
In the court-filed complaint, Russia claims that it has already spent A$8.2m (£4.3m, $5.5m) on the labor-intensive construction.
If Australia was permitted to reapply, Russia asserted that the integrity of the partially finished structure would be jeopardized.
The High Court of Australia, however, called Russia's appeal of the ruling "weak" and "hard to understand.".
Last week, Mr. Albanese stated that while he anticipated some backlash from Russia, he was unconcerned about the legal issue.
He said, "Recently, Russian law enforcement hasn't been all that good.
We don't anticipate Russia to be in a position to discuss international law given their blatant disregard for it in their invasion of Ukraine.