On 30 January 2026, Justice Perram of the Federal Court of Australia (Court) handed down a $14 million dollar penalty to foreign investor, Indian Ocean International Shipping and Service Company Ltd (Indian Ocean) and its sole director and shareholder, Ms Jing Tian. This is the first action of its kind outside the residential real estate space with Treasurer, Jim Chalmers, bringing proceedings on 26 June 2025 in response to a contravention of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA).
What events led to the FIRB disposal order penalties?
Indian Ocean was previously subjected to Disposal Orders issued by the Treasurer in June 2024 which required it to sell its shares in Northern Minerals, an ASX listed company which owns one of very few deposits outside of China where dysprosium and terbium, two rare earth elements, can be mined. Indian Ocean contravened those orders by engaging in a series of transfers whereby the shares were transferred back and forth between itself and Ms Tian, who was the sole director and shareholder of Indian Ocean, and then eventually to Ms Ning Lyu who later was appointed the new director and secretary of Indian Ocean. Because of Ms Tian’s role as the sole director and shareholder of Indian Ocean, she was an “associate” of Indian Ocean within the definition captured under section 6 of the FATA. Section 7 of the Disposal Orders called for Indian Ocean to dispose of those shares to “one or more persons who are not associates of Indian Ocean”, which it failed to do.
We provide further background on Indian Ocean, Northern Minerals and the broader context in which the non-compliance arises in an article previously published, titled ‘Treasurer Files First Court Case for Non-Compliance with Disposal Orders’.
What penalties did the Federal Court impose for the breaches?
There is little to no precedent for a situation like this, but the Court exercised its broad discretion in determining the appropriate remedy for these offences. Below is a breakdown of the penalties issued by the Court and the relevant contravention which each penalty applies to:
| Party | Contravened legislation | Penalty |
| Indian Ocean | section 89(1) of the FATA pursuant to section 82(3) of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (RP Act) | $10 million |
| Ms Jing Tian | section 89(1) of the FATA pursuant to section 82(3) of the RP Act | $4 million |
Indian Ocean and Ms Tian were also ordered to pay the Treasurer the costs of the proceeding.
For an offence of this nature, the potential penalties available are both criminal and civil and can range in severity, from up to 10 years’ imprisonment to a fine of up to 15,000 penalty units (currently $4.95 million) for an individual and a financial penalty of 150,000 penalty units (currently $49.5 million) for a company. The $10 million dollar penalty issued on Indian Ocean is well below the maximum financial penalty available for a corporation, whereas the $4 million dollar penalty issued on Ms Tian is on the higher end of the maximum financial penalty available for an individual.
As the first set of proceedings initiated for non-compliance with the FATA, this outcome will likely serve as a benchmark for how future offences of a similar nature are to be treated in Australian courts.
What is prompting FIRB’s increased enforcement in critical minerals?
The FATA has long had severe penalty provisions, including prison sentences for individuals who knowingly breach the law. However, traditional enforcement has been limited to the residential real estate sector or administrative penalties.
In the current circumstances, it appears that the repeated, seemingly intentional breaches of the FATA coupled with the fact it was in a designated national security sector of critical minerals warranted FIRB and the Treasurer seeking further enforcement. This signals to the market that FIRB will actively enforce the FATA and monitor compliance to the full extent available, making it essential for strict FIRB compliance to be followed at all times.
Considering the government’s willingness to take enforcement action, we recommend early engagement with legal advisers. The Foreign Investment team at McCullough Robertson has extensive expertise in navigating FIRB requirements and can assist in managing regulatory risk at all stages of a proposed investment.