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Ruling does not address legality of Trademark Ban under International Law, says tobacco company

Philip Morris Asia Limited (PMAL), a Hong Kong based cigarette and tabacco company that is the parent of Philip Morris Australia, said today that an arbitral tribunal has declined jurisdiction to hear the merits of PMAL’s case against the Commonwealth of Australia under Australia’s 1993 Investment Promotion and Protection Agreement (IPPA) with Hong Kong.

On 1 December 2011, the Tobacco Plain Packaging Act 2011 (the Act) became law in Australia which according to the Australia government meant to be part of a comprehensive range of tobacco control measures to reduce the rate of smoking in Australia and is an investment in the long term health of Australians.

Australia is the only country that currently mandates plain tobacco packaging, as a result of laws that were enacted in 2012.

Prior to the enactment of the Act, PMAL challenged the tobacco plain packaging legislation under the IPPA on November 21, 2011 and became the first investor-state dispute that has been brought against Australia. PMAL asserted that the sweeping ban on trademarks breaches the foreign investment protections that the Australian government guaranteed in its IPPA with Hong Kong.

“There is nothing in today’s outcome that addresses, let alone validates, plain packaging in Australia or anywhere else,” said Marc Firestone, Philip Morris International Senior Vice President and General Counsel. “It is regrettable that the outcome hinged entirely on a procedural issue that Australia chose to advocate instead of confronting head on the merits of whether plain packaging is legal or even works”.

Firestone continued, “This case has never been about a government’s undeniable authority to regulate in the public interest. Nor has there ever been any question that tobacco products merit strict oversight. In our view, the real point is simply this: Even when pursuing tobacco control objectives, governments are still accountable if they choose to use unlawful means. This is the essence of the rule of law.”

The Australian government’s tobacco packaging policy remains the subject of international disagreement. The World Trade Organization (WTO) is currently considering challenges to Australia's legislation by four WTO Members. Separately, courts in Europe are also assessing plain packaging under national and international law. The decision on jurisdiction under the Australia-Hong Kong IPPA has no bearing on any of these proceedings.

Australia’s former Labor government made bold promises regarding the public health benefits that its excessive, expropriatory trademark ban -- which it labeled a policy experiment – would yield. Three years into the experiment, data from a range of sources consistently demonstrate that the promised outcomes are not being delivered.

PMAL is reviewing the Tribunal’s decision in detail and will determine any further course of action.