by ABC Radio Australia 22 November 2011


The Australian government has pushed through the world’s first plain packaging anti-smoking laws but will have to defend them in both foreign and local legal arenas.

In the same day the laws were passed, cigarette maker Philip Morris announced it had launched legal action against the Australian government.

The tobacco giant’s Hong Kong office says the law breaks a trade deal between the Chinese territory and Australia.

The laws mean from December 2012, cigarettes will be sold in plain olive wrappers dominated by big graphic health warnings.

Presenter: Sen Lam
Speaker: Don Rothwell, professor of international law at the Australian National University

ROTHWELL: Philip Morris has been referring to this possible legal avenue now for about four or five months. Previously the difficulty was that there was in my view no real legal case because the legislation hadn’t been enacted. But as you’ve just noted, the legislation has now passed through parliament and it now appears clear that Philip Morris has sought to argue that under the bilateral investment treaty between Hong Kong and Australia that there is taking place with this legislation an unlawful expropriation of Philip Morris’s investment into the Australian market as a result of the barring of Philip Morris being able to use its brand and product details on the packaging of its tobacco products.

LAM: And where will the legal action take place? In both Hong Kong and here in Australia?

ROTHWELL: Well there is a 90 day cooling off period that’s required under the bilateral investment treaty, which basically gives both sides the opportunity to try to resolve or settle their dispute. However if that proves to be unsuccessful then the matter would most likely be sent to the International Centre for Settlement of Investment Disputes in Washington.

LAM: Well Philip Morris also said that it served a notice of arbitration with the UN Commission on International Trade law. What does this mean?

ROTHWELL: Well I think this just highlights that Philip Morris is pursuing multiple different legal avenues. So they’re also looking at this being a measure which is inconsistent with international trade law under the World Trade Organisation. They’ve also highlighted the potential for exploring options under what’s called the TRIPS Agreement, which is the trade related agreement on aspects of intellectual property rights. So Philip Morris at the moment is undertaking apparently a multi-pronged approach to address these issues both in international forums, plus as you’ve identified also possibly before the High Court of Australia.

LAM: So essentially what is Philip Morris looking for? What is it seeking?

ROTHWELL: Well ultimately one would think that they’re seeking to have the Australian government back down and reverse this law, which doesn’t take effect until December 2012. The alternative to that would be very significant amounts of compensation, and there are press reports that today in Australia of course indicating that Philip Morris would be seeking billions of dollars. Now they haven’t quantified that precisely, but ultimately they’re saying that the acquisition of the intellectual property that’s commonly associated with their trade marks and their product packaging would in their view cost them very significant amounts in terms of their income generated from sales.

LAM: Australia’s Health Minister Nicola Roxon has criticised Philip Morris for what she calls its addiction to legal action, and the federal government said that it had good legal advice before it pushed the laws through. Do you agree with that assessment that the Australian government will successfully defend this case?

ROTHWELL: Look there are strengths and weaknesses for both sides of the argument. The key questions being whether what Australia is doing is seeking to acquire property by the imposition of these rules, and if so what are the consequences that flow on from that legally. On the other side of the case, Australia would no doubt argue that these are legitimate public health measures which are being applied on a non-discriminatory basis to all tobacco retailers in Australia. So it will ultimately come down to those pivotal legal questions, and to that end it’ll be quite an interesting area of law to investigate because of the growing recognition of the legitimacy of public health measures of this type.

LAM: And just briefly Don Rothwell, are we looking at a long drawn battle here, or is there a timeframe for this legal case?

ROTHWELL: Well if the matter is to go to the High Court of Australia it would probably take up to a year to probably work its way through the courts there. International litigation would also possibly take the same period of time. So we may well be looking well into 2012 before we see a final resolution.