AUSTRALIA – Philip Morris Asia has lost its challenge to Australia’s plain cigarette packaging laws; this means that the laws, which were introduced in 2011, will remain in place in the country.
Philip Morris Asia started legal proceedings against the Australian government from as early as June 2011, and had brought the arbitration case against it using a legal mechanism called Investor-State Dispute Settlement (ISDS) – it was the first such investor-state dispute brought against the country.
The tobacco giant challenged Australia’s plain cigarette packaging legislation on the basis of a 1993 agreement between the Commonwealth government and the government of Hong Kong for the promotion and protection of investments.
Philip Morris Asia argued that Australia's tobacco plain packaging measure constituted an expropriation of its Australian investments in breach of Article 6 of the agreement.
In addition, the company alleged that Australia's tobacco plain packaging measure was in breach of its commitment under Article 2(2) of the agreement to accord fair and equitable treatment to Philip Morris Asia's investments.
It also asserted that plain packaging constituted an unreasonable and discriminatory measure and that Philip Morris Asia's investments had been deprived of full protection and security in breach of the agreement.
However, the Singapore-based arbitration tribunal which was constituted in May 2012 to hear the case, issued a unanimous decision agreeing with Australia's position that it has no jurisdiction to hear Philip Morris's claim.
This concludes the arbitration, other than any proceedings related to the recovery of Australia's cost, and subject to any appeal Philip Morris Asia may seek to institute in Singapore.
Australia’s Minister for Rural Health Fiona Nash welcomed the decision, saying… For the full story, subscribe to Packaging Business Insight Asia here.