Australia: Challenging Legislation

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All four big tobacco companies- British American Tobacco, Philip Morris, Imperial Tobacco, and Japan Tobacco International have brought legal challenges against Australia’s plain packaging law.

Australia – Hong Kong Bilateral Investment Treaty

Hours after the Australian Parliament passed the world’s first plain packaging legislation on 21 November 2011, a Philip Morris Asia press release announced that PMA had started formal legal proceedings under the Arbitration Rules of the United Nations Commission on International Trade Law 2010, claiming the legislation did not comply with The Australia – Hong Kong Bilateral Investment Treaty.1 It was noted that this ad-hoc tribunal meets “behind closed doors” and documentation is usually “kept out of the public domain”. 2
This challenge was especially contentious as Philip Morris Asia bought a large number of shares in Philip Morris Limited (Australia) after the Australian government announced that they would be considering plain packaging. Andrew Mitchell (international law expert) highlighted that the timing of this acquisition of shares on 23 February 2011, a whole 14 months after the Government announced its intention to introduce plain packs, was a concern. It suggests the acquisition was a strategic move in order to make this argument.3 “It will be very difficult to argue that at the time of making that investment they had a legitimate expectation that plain packaging wasn’t going to be introduced when the Government had already announced it was going to do exactly that,” he said.3

BIT Court Ruling

On 18 December 2015, the Permanent Court of Arbitration issued a unanimous decision that it had no jurisdiction to hear Philip Morris’s claim.456

Acquisition of Trademarks

In addition to a legal claim in relation to the Bilateral Investment Treaty, on 20 December 2011 it was announced that Philip Morris Limited (PML) would challenge the legislation in Australia’s High Court.7
British American Tobacco Australia, Imperial Tobacco Australia and Japan Tobacco International also challenged Australia’s plain packaging legislation in the High Court.8910
Below are comments made by each of the big four companies when they launched High Court challenges in Australia.

Philip Morris Australia -“We believe plain packaging violates the Australian Constitution because the Government is seeking to acquire our property without paying compensation,” Chris Argent, Spokesman7
British American Tobacco – The legislation is: “unconstitutional and invalid due to the fact the Federal Government is trying to acquire our valuable intellectual property without compensation.”11
Imperial Tobacco Australia– “Unchallenged, the Australian government would otherwise be able to simply take the intellectual property of legal entities,” General Manager Melvin Ruigrok9
Japan Tobacco International – “This legislation will stop JTI from using its brands, which are its most valuable property, and is unconstitutional.” Fitz, Regional President for Asia Pacific10

Australian High Court Ruling

The key issue before the court was whether, under the constitution, plain packaging represented an “acquisition of property” by the government, from which they could benefit.12
On 15 August 2012, the High Court in Australia ruled that plain packaging law was constitutionally valid.13
The reasons for the High Court’s decision were not published alongside the ruling and were expected at a later date. According to The Sydney Morning Herald, president of the Australian Council on Smoking and Health, Mike Daube, said that the ruling was “a massive win for public health” and that “It is also the global tobacco industry’s worst defeat” to date.13
On the day of the ruling, British American Tobacco (BAT), Philip Morris Limited (PML) and Imperial Tobacco all issued press releases criticising the ruling, with some promising further legal action.121415
PML spokesperson Chris Argent said “we will have to wait to read the court’s opinion to fully assess today’s decision. Regardless, the legality of plain packaging, including whether Australia will have to pay substantial compensation to Philip Morris Asia remains an issue and will be considered in other legal challenges.”
BATA (Australia’s cigarette market share leader) released a statement titled “Serious unintended consequences start 1 December” (see Image). Their spokesperson Scott McIntyre said the legislation was a bad piece of law that would have serious unintended consequences. “We still believe that the government had no right to remove a legal company’s intellectual property but British American Tobacco Australia will comply with this and every other law.”14

BAT Media Release 15 August 2012

BATA’s statement reiterated its position on plain packaging, claiming that there is no evidence that it will work to reduce uptake and smoking prevalence. It also argued that as a result of increases in counterfeit and price wars between tobacco companies, youth smoking would inadvertently increase due to the increased availability of cheap cigarettes. BATA also claimed that the government will lose tax revenues “while crime bosses bank big profits” from the increase in counterfeiting and smuggling.14
Imperial Tobacco, which has a smaller market share in Australia than PML and BAT, released a statement reiterating earlier arguments that plain packaging will only benefit criminals and will have detrimental impacts on the revenue of retailers and government. Their statement also said that they “will continue to defend our legitimate right to utilise our trademarks to differentiate our brands from those of our competitors”.15
In the UK, industry front group Forest claimed that the ruling in Australia would not affect its campaign against plain packaging. The Director of Forest, Simon Clark encouraged the UK government not to follow Australia’s lead and to listen instead to the 235, 000 signatures of the Hands Off Our Packs campaign.16 However, as a result of a FOI request the Department of Health in the UK made a number of its documents public which questioned the integrity of the Hands Off Our Packs campaign.

World Trade Organization Legal Challenges

In addition to the challenges made by Philip Morris Asia under the auspices of The Australia – Hong Kong Bilateral Investment Treaty other legal challenges have been made via the World Trade Organization (WTO).
On 5 May 2014, panellists were appointed to examine the complaints of the Ukraine, Honduras, Dominican Republic, Cube and Indonesia.17 These countries argue that plain packaging law breaches the WTO’s General Agreement on Tariffs and Trade (GATT), Agreement on Technical Barriers to Trade (TBT Agreement) and Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement) because plain packaging is discriminatory, more trade restrictive than necessary, and unjustifiably infringes upon trademark rights.
It has been claimed that Philip Morris is covering some legal costs for the Dominican Republic and Cuba and British American Tobacco are doing the same for both Ukraine and Honduras.1819

WTO Ruling

A ruling was expected in the second half of 2016.

Counter Evidence

Visit the following pages to learn how the industry developed the intellectual property argument as a defence to plain packaging in the early 1990s.

For more information on the evidence countering industry arguments against plain packaging in general, see:

TobaccoTactics Resources

TCRG Research

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References

  1. ↑Philip Morris Asia Limited, Philip Morris Asia Files Lawsuit Against the Australian Government over Plain Packaging, News Release, 21 November 2011, accessed December 2011
  2. ↑Kyla Tienhaara, ‘Air of intrigue in move against plain packaging’, Canberra Times, 24 November 2011, accessed December 2011
  3. ↑abL. Mezrani, Tobacco challenges unlikely to succeed, 17 August 2012, accessed October 2012
  4. ↑J. Mather, Philip Morris loses case against Australia’s plain packaging law, Financial Review, 18 December 2015, accessed December 2015
  5. ↑D. Hurst, Australia wins international legal battle with Philip Morris over plain packaging, The Guardian, 18 December 2015, accessed December 2015
  6. ↑G. Hutchens, Australian government wins plain packaging case against Philip morris, The Sydney Morning Herald, 18 December 2015, accessed December 2015
  7. ↑abPhilip Morris International, Philip Morris Limited Files High Court Challenge Against the Australian Government Over Plain Packaging, Media Release, 20 December 2011, accessed December 2011
  8. ↑British American Tobacco, High Court plain packaging proceedings commence, Media Release, 1 December 2011, accessed December 2011
  9. ↑abThe Washington Post, ‘Imperial Tobacco becomes 2nd company to challenge packaging laws in Australia’s High Court’, 6 December 2011, accessed 6 December 2011, original link now removed
  10. ↑abPRNewswire, Japan Tobacco International (JTI) Launches High Court Challenge to Australia’s Plain Packaging Laws, 14 December 2011, accessed December 2011
  11. ↑The Herald Sun, British American Tobacco sues the Gillard Government, 1 December 2011, accessed 2 December 2011
  12. ↑abPhilip Morris Limited, Philip Morris Limited comments on Australian High Court decision on plain packaging for tobacco products, 15 August 2012, accessed August 2012
  13. ↑abMark Metherell, Big Tobacco loses high court battle over plain packaging, The Sydney Morning Herald, 15 August 2012, accessed August 2012
  14. ↑abcBritish American Tobacco Australia, Serious unintended consequences start 1 December, 15 August 2012, accessed August 2012
  15. ↑abImperial Tobacco, Imperial Tobacco responds to the outcome of the Australian legal challenge against plain packaging for tobacco products, 15 August 2012, accessed August 2012
  16. ↑Forest, Aussie ruling on plain packaging won’t affect UK campaign says Forest, 15 August 2012, accessed August 2012
  17. ↑McCabe Centre for Law and Cancer, Dispute in the World Trade Organization: Latest developments, accessed December 2015
  18. ↑A. Martin, Philip Morris leads plain packs battle in Global Trade arena, Bloomberg Business News, 22 August 2013, accessed December 2015
  19. ↑Andrew Martin, Philip Morris Leads Plain Packs Battle in Global Trade Arena, Bloomberg, 22 August 2013, accessed July 2014

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