21 Dec 2015
Tobacco giant Philip Morris has lost its fight against the plain packaging laws that it claimed would threaten the intellectual property of its brands.
The company behind Marlboro, Peter Jackson and Longbeach cigarettes has been seeking to protect its investments since Australia's plain-packaging laws came into force in 2011.
The laws ban the use of trademarks on cigarette packs.
The company argued the laws amounted to a "sweeping ban on trademarks" and breached Australia's 1993 Investment Promotion and Protection Agreement with Hong Kong.
But the Permanent Court of Arbitration rejected the case on Friday, agreeing with Australia's argument it had no jurisdiction to hear the claim.
The arbitration is now over, apart from proceedings related to the recovery of Australia's costs.
Philip Morris Asia may seek to institute an appeal in Singapore, but it is understood the federal government has legal advice suggesting it too is unlikely to be successful.
Rural Health Minister Fiona Nash, who is responsible for tobacco policy, welcomed the decision.
"Plain packaging is a legitimate public health measure which is consistent with Australia's international legal obligations," she said.
The Public Health Association of Australia says the ruling is the "best Christmas present", but Philip Morris has spoken of plans to review the decision to determine any further action.
"There is nothing in today's outcome that addresses, let alone validates, plain packaging in Australia or anywhere else," Philip Morris International senior vice president Marc Firestone said.
"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."
The company believes plain packaging laws breach foreign investment protections the Australian government guaranteed in its trade agreement with Hong Kong, which contains an investor state dispute settlement mechanism.
Challenges to Australia's plain packaging laws were still being considered by the World Trade Organisation, while courts in Europe were also assessing the laws, it said.
Australia was the first country to introduce plain packaging laws, and others including France, Ireland and the UK are following suit.