Former foreign affairs minister Marise Payne imposed sanctions on billionaire Oleg Deripaska in March last year.
The decision stopped the industrialist from travelling to Australia or profiting from a shareholding in Rio Tinto-owned Queensland Alumina - which he was later legally frozen out of.
He's asked the Federal Court to review and quash the decision and is represented by former attorney-general Christian Porter.
Mr Deripaska's case is that Ms Payne had insufficient evidence and used irrelevant considerations to make the determination.
He claims the Australian government was swayed by other "like-minded" countries' sanctions, a verdict in a US court case, and vague, unsourced internet "gossip".
Mr Porter on Monday told the Perth courtroom that discretion should have been shown to his client and Ms Payne had failed in her duties because she was not properly advised by the Department of Foreign Affairs and Trade.
He said Mr Deripaska had to be identified as undertaking activities that were economically significant and strategic to Russia and that wasn't done sufficiently.
"This is a species of error, which requires something to be clearly put, which is the failure to present probative information upon which the jurisdictional threshold can be enlivened," he said.
"In most instances, we say, it's not even clear what is being identified."
Court documents show Ms Payne took numerous steps before sanctions were imposed on Mr Deripaska.
These included signing DFAT-supplied documents saying she had considered the case against the Russian and was satisfied targeted financial sanctions and a travel ban were supported.
This was based on a statement of case that asserted Mr Deripaska was a prominent businessman with "particularly close ties to President Putin".
It said he had "not separate(d) himself from the Russian state" and that he held a diplomatic passport and represented his country to other countries.
The statement also said he was the subject of sanctions in the US, Canada and UK, and that he had sued the US government over sanctions stemming from alleged election interference but the case had been dismissed for lacking merit.
The case continues.
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