Plain packs case an ‘abuse of rights’

| May 17, 2016

An international tribunal has unveiled part of a previously secret ruling confirming it rejected a bid by Philip Morris to sue Australia over its standardized tobacco packaging laws, calling the attempt, ‘an abuse of rights’, according to an Agence France Presse story published in The Guardian newspaper.

In its heavily redacted 186-page ruling dating from 17 December 2015, the permanent court of arbitration said it had no jurisdiction over the case brought by Philip Morris.

In 2012, Australia became the first country to require that cigarettes were sold in standardized packages, a requirement that PM had challenged at the arbitration court in 2011 after the standardized-packaging legislation was passed.

The challenge was launched by Philip Morris Asia Ltd (PMAL), a Hong Kong-based company that is a subsidiary of Philip Morris International and the parent of Philip Morris Australia, on the basis of Australia’s 1993 Investment Promotion and Protection Agreement (IPPA) with Hong Kong.

But the permanent court of arbitration found in its unanimous ruling that ‘the main and determinative, if not sole, reason’ for a restructuring of the company as far back as 2005 had been to enable it ‘to bring a claim under the treaty, using an entity from Hong Kong’ after it had received ample warnings that such legislation was being considered.

‘The record indeed shows that the principal, if not sole, purpose of the restructuring was to gain protection under the treaty in respect of the very measures that form the subject matter of the present arbitration,’ the court ruled.

‘The tribunal cannot but conclude that the initiation of this arbitration constitutes an abuse of rights.’

The court found that Philip Morris’ claims were ‘inadmissible’ and that it was ‘precluded from exercising jurisdiction over this dispute’.

In responding in December to the December 17 announcement, Marc Firestone, Philip Morris International’s senior vice president and general counsel, said there was nothing in the outcome that addressed, let alone validated, standardized packaging in Australia or anywhere else.

“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,” he said.

In a note posted on its website, PMI said that PMAL had filed its claims because the sweeping ban on trademarks had breached the foreign investment protections that the Australian government guaranteed in its IPPA with Hong Kong.

“This case has never been about a government’s undeniable authority to regulate in the public interest,” Firestone said. “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.”

PMAL was said in December to be reviewing the tribunal’s decision and would determine any further course of action.

Category: Breaking News

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