19 February, 2016

Plain and Simple - Australia Wins Plain Packaging Challenge in Asia

Plain Packaging, the initiative to effectively remove all identifying markings (one could say the only distinctive features in tobacco), is a debate that has been raging on for years, with both sides voicing very valid concerns. Australia has been on the forefront of plain packaging, passing the Tobacco Plain Packaging Act 2011 over 5 years ago, and the Act has not been without its challenges. Currently there still are suspended proceedings at the WTO, initiated by Ukraine, over the legality of the Act (discussed, prior to the suspension, here); however, this has not been the only battleground the Act has been fought over in.

In a recent action in the Permanent Court of Arbitration, Philip Morris Asia Limited (Hong Kong) challenged the legislation under the 1993 Agreement between the Government of Australia and the Government of Hong Kong for the Promotion and Protection of Investments, which sets certain rules for both countries in relation to foreign investments from those countries. These are, inter alia, that "[e]ach Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its area" and that "[i]nvestors of either Contracting Party shall not be deprived of their investments nor subjected to measures having effect equivalent to such deprivation in the area of the other Contracting Party except under due process of law". The latter of the two is the more important argument, as Philip Morris argued that Australia infringed this Article (Article 6) through its plain packaging law. Additionally Philip Morris argued that the law did not treat their investment fairly and equally (as mandated by Article 2(2)).

Without discussing the merits of Philip Morris' case, Australia argued a lack of proper jurisdiction for the Court of Arbitration, as, among other factors, Philip Morris Asia had only acquired the full shareholding of their Australian counterpart after the introduction of the legislation, leaving them fully aware and accepting of the potential negative influence on their investment by the law's passing.

The Tribunal decided on this late last year (with the decision not having been published as of yet, due to confidentiality reasons, which this writer was waiting for) that it did not have jurisdiction to hear the case, and dismissed Philip Morris Asia's case.

The decision, albeit very low in substance of the intellectual property laws that underpin plain packaging, is an interesting one, and a worthwhile illustration of the power of international trade agreements. The Transatlantic Trade and Investment Partnership (TTIP) and the controversy surrounding it only makes this more pronounced, which could, potentially, afford similar routes for corporations to challenges laws that make like difficult for them. In any event, this writer found the case interesting, although underwhelming in its substance, and would have liked to see things debated in more length as to the actual law and its possible infringement of the Agreement.

Source: Sydney Morning Herald

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