Clear The Air News Tobacco Blog Rotating Header Image

Australia

Smoke and Mirrors? Structuring of Foreign Investments Following the Philip Morris Award

Jun 8th, 2016
by Editor.
No comments yet

http://www.lexology.com/library/detail.aspx?g=a2cfda47-0e67-4a86-91c4-2eba3fa71966

Perhaps the most high-profile case in the debate over investor-state arbitration in recent years has been the investment treaty claim by Philip Morris against the Australian Government, concerning the introduction of tobacco plain packaging rules. Opponents have relied on the case to highlight the perceived risk of “regulatory chill” caused by the proliferation of “secret courts”, while many proponents had hoped that the case would result in an award that carefully balanced the State’s “right to regulate” with the investor’s rights to “fair and equitable treatment” and “legitimate expectations”. The recently published decision[1] of the tribunal not to exercise jurisdiction over the claim has therefore resulted in a degree of disappointment from all quarters. Nonetheless, the award on jurisdiction and admissibility of 17 December 2015 deals with some important issues that have direct relevance to any investors seeking to restructure their investments in a manner that maximises their chances of obtaining investment treaty protections.

Background

The claim was brought by Philip Morris Asia Limited (“PM Asia“), a Hong Kong based subsidiary of Philip Morris International Inc. (“PMI“), under the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments, dated 15 September 1993 (the “Treaty“). The substantive claim arose from the introduction of the Tobacco Plain Packaging Act 2011 and the Tobacco Plain Packaging Regulations 2011, which prohibited the use of brands, trademarks and logos on tobacco packaging. PM Asia argued that this amounted to an indirect expropriation of its intellectual property rights and transformed its Australian subsidiary (“PM Australia“) from a manufacturer of branded products to a manufacturer of commoditised products, thus substantially diminishing the value of its investments in Australia. PM Asia claimed damages of over US$ 4 billion.

The award sets out a detailed description of the chronology preceding the claim, but in summary, Australia had first considered plain packaging legislation in 1995. After various consultations and one abortive attempt to introduce legislation into the Senate, the Australian Prime Minister, Kevin Rudd, officially announced his intention to introduce plain packaging legislation in April 2010. Following Mr Rudd’s defenestration by Julia Gillard and the subsequent election in August 2010, the Tobacco Plain Packaging Bill was eventually introduced into parliament in April 2011 and received Royal Assent on 1 December 2011.

In parallel with these developments, PMI had expressed its opposition to plain packaging legislation in Australia from at least late 2009. It maintained its dialogue with the Government from that point onwards, describing the proposals as “restrictions tantamount to expropriation” and threatening “legal challenges” if the proposals were pursued. Staring in September 2010, PMI began restructuring several of its global affiliates, with the stated aim of streamlining its corporate structure. On 21 January 2011, PMI filed a foreign investment application regarding the proposed purchase of PM Australia by PM Asia. The Treasury subsequently issued a “non-objection letter” and the acquisition completed on 23 February 2011. PM Asia issued its initial notice of claim under the Treaty on 27 June 2011 and its formal notice of arbitration on 21 November 2011, the day that the Tobacco Plain Packaging Bill passed both Houses of Parliament.

Award on Jurisdiction and Admissibility

The award on jurisdiction and admissibility deals with two preliminary objections by Australia:

  • the “Non-Admission Objection” – Australia argued that PM Asia’s investment in PM Australia was not properly admitted in accordance with Australian law and therefore fell outside the subject-matter jurisdiction (ratione materiae) of the tribunal;
  • the “Temporal Objection” – Australia argued that there was a pre-existing dispute between PMI and the Australian Government concerning the plain packaging proposals, and PM Asia’s investment in PM Australia post-dated this dispute, so it did not fall within the temporal jurisdiction (ratione temporis) of the tribunal. Australia supplemented this jurisdictional objection with an admissibility objection: even if the tribunal had jurisdiction over the claim, it should not exercise its jurisdiction because PM Asia’s claim under the Treaty amounted to an abuse of process.
  • The “Non-Admission Objection” is specific to the facts of the case and is therefore of limited significance. However, the tribunal’s findings on the “Temporal Objection” may have wider application and are therefore worth further consideration.

PM Asia’s primary response to the Temporal Objection was that it had controlled PM Australia prior to the restructuring, through the exercise of management functions and strategic/budgetary decisions since 2001. The Treaty definition of an “investment” included assets “owned or controlled” by an investor and so PM Asia argued that it was eligible for the protections afforded by the Treaty long before its formal acquisition of PM Australia. The tribunal undertook a brief analysis of the case law on the distinction between ownership and control and found that PM Asia’s involvement in the approval of expenditures and dividends, its role in branding and marketing strategy and its supervision of PM Australia’s staff were insufficient to amount to “control” in circumstances where PM Asia’s actions were undertaken in accordance with PMI global policies and procedures and were ultimately subject to PMI approvals.

Having determined that PM Asia’s only eligible investment was its acquisition of PM Australia in February 2011, the tribunal therefore needed to ascertain whether it had jurisdiction and, if so, whether there was any reason for it to refuse to exercise that jurisdiction. Applying Gremcitel,[2] the tribunal held that whenever a cause of action is based on a treaty breach, the test for ratione temporis is whether the claimant made the protected investment before the moment when the alleged breach occurred. In that case, the tribunal had found that the critical date on which the breach crystallised was when the relevant legislative measures were adopted, notwithstanding the fact that this may have been “the culmination of a process or sequence of events which may have started years earlier“. In PM Asia’s case, it was the enactment of the Tobacco Plain Packaging Act in December 2011 that allegedly breached the Treaty and so PM Asia’s investment in February 2011 pre-dated the breach. Accordingly, the tribunal found that it did have jurisdiction over PM Asia’s claim.

Moving on to the question of admissibility, the tribunal undertook an analysis of the arbitral case law on abuse of process. Drawing on several prominent cases,[3] the tribunal emphasised that the mere fact of restructuring an investment to obtain the protection of an investment treaty is not per se illegitimate and that the threshold for finding an “abusive manipulation of the system of international investment protection” is high.[4] Applying Tidewater andMobil,[5] the tribunal determined that the key question was whether there was a “pre-existing” dispute at the time the restructuring was carried out. The tribunal grappled with the various formulations adopted in Gremcitel, Lao Holdingsand Pac Rim[6] and held that the initiation of a treaty claim constitutes an abuse of process when an investor “has changed its corporate structure to gain the protection of an investment treaty at a point when a specific dispute was foreseeable“.[7] Rather than adopting the test of foreseeability articulated in Pac Rim as “a very high probability and not merely a possibility“, the tribunal held instead that a dispute is foreseeable when there is a “reasonable prospect… that a measure which may give rise to a treaty claim will materialise“.[8]

Applying this test to the facts, the tribunal noted PMI’s objection to the Government’s proposals as early as 2009, including specific references to the deprivation of property rights and possible legal challenges. The tribunal also emphasised the fact that, while it took a considerable time for the legislation to pass and there was a degree of uncertainty as to whether the Government could obtain the parliamentary majority needed to pass the legislation, the intention of the Government remained relatively clear since April 2010 and so there was at least a “reasonable prospect” of the legislation being passed from that point onwards.

Notwithstanding these findings, the tribunal acknowledged that the commencement of a claim shortly after a corporate restructuring might not necessarily amount to an abuse of process where the restructuring was justified “independently of the possibility of bringing a claim“.[9] On the facts, the tribunal was unconvinced by PM Asia’s insistence that the restructuring (i) was part of a broader group-wide process, (ii) was needed to align ownership with pre-existing management control, (iii) helped minimise PM Asia’s tax liabilities, and (iv) helped to optimise cash flow. In particular, the tribunal noted the failure of PM Asia to present any witnesses who were directly familiar with the rationale for the restructuring and the lack of “contemporaneous corporate memoranda or other internal correspondence sufficiently explaining the business case for the restructuring in detail“.[10]

The tribunal also placed significant emphasis on the volume and timing of legal advice from PMI’s advisors concerning potential investment treaty claims. As part of the production phase of the arbitration, the parties agreed to exchange privilege logs listing any documents that they wished to withhold on grounds of privilege or political sensitivity. Following objections from both parties, the tribunal ordered the production of many of those documents.[11] While the award itself contains heavy redactions in relation to privileged and commercially sensitive documents, it is evident that the subject headings of emails passing between PMI and its legal advisors (for example, “Australia-HK BIT“, “Arbitration under the HK BIT“) gave a clear indication that PMI was being advised on potential investment treaty claims from as early as July 2010. Critical email exchanges also coincided precisely with the internal approval of the restructuring and the finalisation of the notice of claim.

In such circumstances, the tribunal was satisfied that the passage of the offending legislation was not only foreseeable, but actually foreseen. The tribunal concluded that “the main and determinative, if not sole, reason for the restructuring was the intention to bring a claim under the Treaty, using an entity from Hong Kong“.[12] Since this was carried out “at a time when there was a reasonable prospect that the dispute would materialise” it was deemed to be an abuse of process. Accordingly, the tribunal declared the claim inadmissible, precluding it from exercising jurisdiction over the dispute.

Key Lessons

There are several key lessons to take away from the Philip Morris award for any investor seeking to restructure its foreign investments in an effort to maximise treaty protections:

  • Preparing for the “worst case scenario” by seeking legal advice on investment treaty protections is entirely normal and prudent business behaviour.
  • Similarly, restructuring investments to benefit from treaty protections is unlikely to be abusive where this is in response to a general risk of future disputes.
  • The threshold for abusive conduct lies where a restructuring takes place at a point in time when a specific dispute is foreseeable; in other words, there is a reasonable prospect that a measure giving rise to a treaty claim will materialise.
  • Factual evidence is likely to be fundamental to the outcome of any objection based on abuse of process. It is therefore critical to ensure that any other reasons for the restructuring (such as tax benefits, costs reductions, management rationalisation) are well-documented and are presented in a manner that can be adduced in evidence without jeopardising any subsequent claims for legal privilege.
  • Legal advice on potential investment treaty protections should be sought as early as possible, and certainly prior to the crystallisation of a specific dispute. Wherever possible, any communications seeking legal advice should be clearly marked as privileged and should be drafted carefully to avoid any inadvertent suggestions that a specific dispute is either inevitable or foreseeable.

Smoke and Mirrors? Structuring of Foreign Investments Following the Philip Morris Award

Jun 8th, 2016
by Editor.
No comments yet

http://globalarbitrationnews.com/smoke-mirrors-structuring-foreign-investments-following-philip-morris-award-20160608/#page=1

Perhaps the most high-profile case in the debate over investor-state arbitration in recent years has been the investment treaty claim by Philip Morris against the Australian Government, concerning the introduction of tobacco plain packaging rules. Opponents have relied on the case to highlight the perceived risk of “regulatory chill” caused by the proliferation of “secret courts”, while many proponents had hoped that the case would result in an award that carefully balanced the State’s “right to regulate” with the investor’s rights to “fair and equitable treatment” and “legitimate expectations”. The recently published decision[1] of the tribunal not to exercise jurisdiction over the claim has therefore resulted in a degree of disappointment from all quarters. Nonetheless, the award on jurisdiction and admissibility of 17 December 2015 deals with some important issues that have direct relevance to any investors seeking to restructure their investments in a manner that maximises their chances of obtaining investment treaty protections.

Background

The claim was brought by Philip Morris Asia Limited (“PM Asia“), a Hong Kong based subsidiary of Philip Morris International Inc. (“PMI“), under the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments, dated 15 September 1993 (the “Treaty“). The substantive claim arose from the introduction of the Tobacco Plain Packaging Act 2011 and the Tobacco Plain Packaging Regulations 2011, which prohibited the use of brands, trademarks and logos on tobacco packaging. PM Asia argued that this amounted to an indirect expropriation of its intellectual property rights and transformed its Australian subsidiary (“PM Australia“) from a manufacturer of branded products to a manufacturer of commoditised products, thus substantially diminishing the value of its investments in Australia. PM Asia claimed damages of over US$ 4 billion.

The award sets out a detailed description of the chronology preceding the claim, but in summary, Australia had first considered plain packaging legislation in 1995. After various consultations and one abortive attempt to introduce legislation into the Senate, the Australian Prime Minister, Kevin Rudd, officially announced his intention to introduce plain packaging legislation in April 2010. Following Mr Rudd’s defenestration by Julia Gillard and the subsequent election in August 2010, the Tobacco Plain Packaging Bill was eventually introduced into parliament in April 2011 and received Royal Assent on 1 December 2011.

In parallel with these developments, PMI had expressed its opposition to plain packaging legislation in Australia from at least late 2009. It maintained its dialogue with the Government from that point onwards, describing the proposals as “restrictions tantamount to expropriation” and threatening “legal challenges” if the proposals were pursued. Staring in September 2010, PMI began restructuring several of its global affiliates, with the stated aim of streamlining its corporate structure. On 21 January 2011, PMI filed a foreign investment application regarding the proposed purchase of PM Australia by PM Asia. The Treasury subsequently issued a “non-objection letter” and the acquisition completed on 23 February 2011. PM Asia issued its initial notice of claim under the Treaty on 27 June 2011 and its formal notice of arbitration on 21 November 2011, the day that the Tobacco Plain Packaging Bill passed both Houses of Parliament.

Award on Jurisdiction and Admissibility

The award on jurisdiction and admissibility deals with two preliminary objections by Australia:

the “Non-Admission Objection” – Australia argued that PM Asia’s investment in PM Australia was not properly admitted in accordance with Australian law and therefore fell outside the subject-matter jurisdiction (ratione materiae) of the tribunal;
the “Temporal Objection” – Australia argued that there was a pre-existing dispute between PMI and the Australian Government concerning the plain packaging proposals, and PM Asia’s investment in PM Australia post-dated this dispute, so it did not fall within the temporal jurisdiction (ratione temporis) of the tribunal. Australia supplemented this jurisdictional objection with an admissibility objection: even if the tribunal had jurisdiction over the claim, it should not exercise its jurisdiction because PM Asia’s claim under the Treaty amounted to an abuse of process.
The “Non-Admission Objection” is specific to the facts of the case and is therefore of limited significance. However, the tribunal’s findings on the “Temporal Objection” may have wider application and are therefore worth further consideration.

PM Asia’s primary response to the Temporal Objection was that it had controlled PM Australia prior to the restructuring, through the exercise of management functions and strategic/budgetary decisions since 2001. The Treaty definition of an “investment” included assets “owned or controlled” by an investor and so PM Asia argued that it was eligible for the protections afforded by the Treaty long before its formal acquisition of PM Australia. The tribunal undertook a brief analysis of the case law on the distinction between ownership and control and found that PM Asia’s involvement in the approval of expenditures and dividends, its role in branding and marketing strategy and its supervision of PM Australia’s staff were insufficient to amount to “control” in circumstances where PM Asia’s actions were undertaken in accordance with PMI global policies and procedures and were ultimately subject to PMI approvals.

Having determined that PM Asia’s only eligible investment was its acquisition of PM Australia in February 2011, the tribunal therefore needed to ascertain whether it had jurisdiction and, if so, whether there was any reason for it to refuse to exercise that jurisdiction. Applying Gremcitel,[2] the tribunal held that whenever a cause of action is based on a treaty breach, the test for ratione temporis is whether the claimant made the protected investment before the moment when the alleged breach occurred. In that case, the tribunal had found that the critical date on which the breach crystallised was when the relevant legislative measures were adopted, notwithstanding the fact that this may have been “the culmination of a process or sequence of events which may have started years earlier“. In PM Asia’s case, it was the enactment of the Tobacco Plain Packaging Act in December 2011 that allegedly breached the Treaty and so PM Asia’s investment in February 2011 pre-dated the breach. Accordingly, the tribunal found that it did have jurisdiction over PM Asia’s claim.

Moving on to the question of admissibility, the tribunal undertook an analysis of the arbitral case law on abuse of process. Drawing on several prominent cases,[3] the tribunal emphasised that the mere fact of restructuring an investment to obtain the protection of an investment treaty is not per se illegitimate and that the threshold for finding an “abusive manipulation of the system of international investment protection” is high.[4] Applying Tidewater and Mobil,[5] the tribunal determined that the key question was whether there was a “pre-existing” dispute at the time the restructuring was carried out. The tribunal grappled with the various formulations adopted in Gremcitel, Lao Holdings and Pac Rim[6] and held that the initiation of a treaty claim constitutes an abuse of process when an investor “has changed its corporate structure to gain the protection of an investment treaty at a point when a specific dispute was foreseeable“.[7] Rather than adopting the test of foreseeability articulated in Pac Rim as “a very high probability and not merely a possibility“, the tribunal held instead that a dispute is foreseeable when there is a “reasonable prospect… that a measure which may give rise to a treaty claim will materialise“.[8]

Applying this test to the facts, the tribunal noted PMI’s objection to the Government’s proposals as early as 2009, including specific references to the deprivation of property rights and possible legal challenges. The tribunal also emphasised the fact that, while it took a considerable time for the legislation to pass and there was a degree of uncertainty as to whether the Government could obtain the parliamentary majority needed to pass the legislation, the intention of the Government remained relatively clear since April 2010 and so there was at least a “reasonable prospect” of the legislation being passed from that point onwards.

Notwithstanding these findings, the tribunal acknowledged that the commencement of a claim shortly after a corporate restructuring might not necessarily amount to an abuse of process where the restructuring was justified “independently of the possibility of bringing a claim“.[9] On the facts, the tribunal was unconvinced by PM Asia’s insistence that the restructuring (i) was part of a broader group-wide process, (ii) was needed to align ownership with pre-existing management control, (iii) helped minimise PM Asia’s tax liabilities, and (iv) helped to optimise cash flow. In particular, the tribunal noted the failure of PM Asia to present any witnesses who were directly familiar with the rationale for the restructuring and the lack of “contemporaneous corporate memoranda or other internal correspondence sufficiently explaining the business case for the restructuring in detail“.[10]

The tribunal also placed significant emphasis on the volume and timing of legal advice from PMI’s advisors concerning potential investment treaty claims. As part of the production phase of the arbitration, the parties agreed to exchange privilege logs listing any documents that they wished to withhold on grounds of privilege or political sensitivity. Following objections from both parties, the tribunal ordered the production of many of those documents.[11] While the award itself contains heavy redactions in relation to privileged and commercially sensitive documents, it is evident that the subject headings of emails passing between PMI and its legal advisors (for example, “Australia-HK BIT“, “Arbitration under the HK BIT“) gave a clear indication that PMI was being advised on potential investment treaty claims from as early as July 2010. Critical email exchanges also coincided precisely with the internal approval of the restructuring and the finalisation of the notice of claim.

In such circumstances, the tribunal was satisfied that the passage of the offending legislation was not only foreseeable, but actually foreseen. The tribunal concluded that “the main and determinative, if not sole, reason for the restructuring was the intention to bring a claim under the Treaty, using an entity from Hong Kong“.[12] Since this was carried out “at a time when there was a reasonable prospect that the dispute would materialise” it was deemed to be an abuse of process. Accordingly, the tribunal declared the claim inadmissible, precluding it from exercising jurisdiction over the dispute.

Key Lessons

There are several key lessons to take away from the Philip Morris award for any investor seeking to restructure its foreign investments in an effort to maximise treaty protections:

Preparing for the “worst case scenario” by seeking legal advice on investment treaty protections is entirely normal and prudent business behaviour.
Similarly, restructuring investments to benefit from treaty protections is unlikely to be abusive where this is in response to a general risk of future disputes.
The threshold for abusive conduct lies where a restructuring takes place at a point in time when a specific dispute is foreseeable; in other words, there is a reasonable prospect that a measure giving rise to a treaty claim will materialise.
Factual evidence is likely to be fundamental to the outcome of any objection based on abuse of process. It is therefore critical to ensure that any other reasons for the restructuring (such as tax benefits, costs reductions, management rationalisation) are well-documented and are presented in a manner that can be adduced in evidence without jeopardising any subsequent claims for legal privilege.
Legal advice on potential investment treaty protections should be sought as early as possible, and certainly prior to the crystallisation of a specific dispute. Wherever possible, any communications seeking legal advice should be clearly marked as privileged and should be drafted carefully to avoid any inadvertent suggestions that a specific dispute is either inevitable or foreseeable.

[1] Award on Jurisdiction and Admissibility, Philip Morris Asia Limited v The Commonwealth of Australia (PCA Case Nº 2012-12); available at https://www.pcacases.com/web/sendAttach/1711

[2] Gremcitel v Peru [ICSID Case No. ARB/11/17]

[3] Tidewater v Venezuela [ICSID Case No. ARB/10/5]; Mobil v Venezuela [ICSID Case No. ARB/07/27]; Gremcitel v Peru [ICSID Case No. ARB/11/17]; and Aguas del Tunari v Bolivia [ICSID Case No. ARB/02/3]

[4] Phoenix Action v Czech Republic [ICSID Case No. ARB/06/5]; Chevron v Ecuador [PCA Case No. 34877]

[5] Tidewater v Venezuela [ICSID Case No. ARB/10/5]; Mobil v Venezuela [ICSID Case No. ARB/07/27]

[6] Gremcitel v Peru [ICSID Case No. ARB/11/17]; Lao Holdings v Laos [ICSID Case No. ARB(AF)/12/6; Pac Rim v El Salvador [ICSID Case No. ARB/09/12]

[7] Paragraph 554

[8] Paragraph 554

[9] Paragraph 570

[10] Paragraph 582

[11] Procedural Order No. 12 (14 November 2014); available at https://www.pcacases.com/web/sendAttach/1483

[12] Paragraph 585

How Adelaide pubs are getting ready for outdoor smoking ban

Jun 6th, 2016
by Editor.
No comments yet

http://www.adelaidenow.com.au/messenger/east-hills/how-adelaide-pubs-are-getting-ready-for-outdoor-smoking-ban/news-story/367a334360ad0b63796a733f44304aad

PUBLICANS and restaurant owners across Adelaide are bracing for a drop-off in business when new outdoor smoking bans come into place in a few weeks time.

But they hope the pain will be short-lived.

We headed out across suburban Adelaide to see how our pubs are readying themselves for the change.

NORWOOD publicans and restaurant owners are bracing for a slight downturn in business when smoking is banned in all outdoor dining areas from next month.

But they say the long-term benefits of the new statewide law, which starts on July 1, will outweigh the short-term pain.

Cafe Buongiorno co-owner Ronald Anderson said while the ban may turn smokers away in the short term, he expected an increase in patronage over time.

“It stops us and others from worrying about what areas are smoking and what areas are non smoking,” Mr Anderson said.

“I think it will make it more comfortable for families to sit outside … so that will be a winner.”

The Bath Hotel owner Tony Franzon said some smokers may be put off by the new laws but he expected business to quickly return to normal.

“History shows that any time you change the goalpost of something, it has a detrimental effect,” Mr Franzon said.

“It’s probably not going to be as bad because it’s been a phase in, and less people smoke.”

Norwood Hotel manager Vanessa Swift was unsure how the law would affect business.

“We will just have to deal with it,” Ms Swift said.

“We have two outdoor dining areas and we might turn one of those areas into a smoking-only area and patrons won’t be able to eat in that area.”

Cafe Bravo patron Julia Conte, of Kensington Park, said the new law could help smokers reduce the number of cigarettes they had each day.

“It absolutely won’t stop me from dining outdoors,” Ms Conte, a smoker, said.

“It just means we will smoke less … it’s a positive thing.”

Fay Wilton, a nonsmoker and patron of Danny’s Thai Bistro, said cafes should cater for smokers.

“My husband smokes … there should be an area right back away from where people eat,” Mrs Wilton said.

The law will come into effect about 18 months after Norwood, Payneham & St Peters Council agreed to lobby the State Government to introduce a smoking ban on The Parade.

The council was yet to approach the government on the issue, saying it would wait at least until the end of the year because it wanted to assess the impact of the statewide ban in outdoor dining areas.

It had not decided whether a ban would take in all of The Parade or just the main retail section between Osmond Tce and Portrush Rd.

SA Health’s director of health protection Chris Lease said businesses who chose to divide outdoor areas into smoking and nonsmoking sections would need to build a wall of at least two metres high.

HE State Government’s decision to ban smoking in all outdoor areas has attracted a mixed reaction from Mitcham’s pub and cafe owners.

From July 1, smoking will be banned in all alfresco dining areas where food is served.

Artisan Cafe owner Heather Holmes-Ross said the blanket ban was an “over-reaction”.

“I can understand why people wouldn’t want (smoking) at busy trade times like lunch, but it is quite a pity that smokers can’t go and have a cigarette anywhere,” Ms Holmes-Ross said.

“It is a pity that it can’t be outside of peak hours.”

Businesses must display signs alerting customers to the ban or face a $1250 fine, while people caught smoking in the area could be fined up to $200.

Ms Holmes-Ross said the new rules would impact the atmosphere of her Blackwood cafe.

“To be forced to put no smoking signs around the place it makes me feel a little cross and an invasion of my right to decorate my cafe the way that I want to,” she said.

A local pub manager, who did not want to be identified, said the changes would be detrimental to his hotel’s large outdoor dining area.

“We live in a democracy anyway and people should be able to have some freedoms as smoking is still legal,” the manager said.

“It has been working very well at our business before this legislation came in.” However, Torrens Arms Hotel manager Tom Marshall said the ban was understandable.

“It will really help to promote a family-friendly venue, especially for people who are looking to dine outside,” Mr Marshall said. “The hardest part for us will be the transitional period when it comes into effect.”

Smoking will still be allowed in outdoor areas where pre-packaged snacks, such as chips and nuts, are available.

SA Health’s director of health protection Chris Lease said businesses who chose to divide outdoor areas into smoking and nonsmoking sections would need to build a wall of at least two metres high.

Substance Abuse minister Leesa Vlahos said the changes would provide a safe space for all patrons.

“These new laws help keep downward pressure on smoking rates, and help improve the health of the community,” she said.

Smokers distort health warnings on cigarette packs, research shows

Jun 3rd, 2016
by Editor.
No comments yet

A study finds that smokers feel ostracised in society because of strict legislation, including plain packaging, and often obscure the warnings

https://www.theguardian.com/australia-news/2016/jun/03/smokers-distort-health-warnings-on-cigarette-packs-research-shows

The author of a 10-year study of Australian smokers has criticised messaging that conveys they are ignorant of its harms, instead finding that they can get “very creative” in avoiding health warnings.

Simone Dennis, an associate professor at the Australian National University, interviewed smokers in public places over the course of a decade and found they increasingly felt marginalised from society because of strict legislation.

“Ten years ago, it was relatively easy to walk up to people and ask them about their smoking. But towards the end of the research, people would be suspicious because they thought I was going to ask them to move on or criticise them in some way.”

She said hostility to smokers in public was not necessarily congruent with science, which found limited evidence of the impact of smoke-laced air in the outdoors. “But it is completely congruent with the de-normalisation campaign that the state has done.”

Dennis said messaging that smokers were ignorant and simply needed to be educated of its harms to be motivated to quit was not held up by her research. She said they could be “very creative” in picking and choosing the messages that reached them.

She spoke to male smokers who would ask for or select packets with health warnings relating to pregnancy, and people with blue eyes who would avoid “the eye packet”.

“It’s almost like the cigarettes in particular packets had different qualities.”

It was common for people to negate the warnings or distort their meaning, such as by putting the cigarettes in another container or covering the packets with stickers.

Dennis interviewed a group of pregnant teenagers who were concerned about their first experience of childbirth, and were smoking in the hope it would reduce the weight of their babies.

“Their greatest fear was giving birth to a large baby … some of them had taken up smoking as a strategic response to alleviate their fear of giving birth to a large infant, while others were smoking harder. That’s obviously not the way messaging is intended to work …

“What it told me was this is not a situation of ignorance. They absolutely knew cigarettes were going to have an effect on their bodies, but they wanted it to.”

She said it was evidence of anti-smoking measures not working the way policymakers had intended; equally, pushing up the price of packets just forced some smokers to rearrange their budgets.

Dennis said she was neutral on the issue of smoking but had received a large volume of complaints from people unhappy with her approach, as well as resistance from public health.

“I’m not trying to encourage people to smoke or get them to stop. I’m just trying to understand their experience.”

According to Department of Health figures, smoking kills an estimated 15,000 Australians and has a social and economic cost of $31.5bn.

The federal and state governments have together committed to reduce the national adult daily smoking rate to 10% by 2018, as well as halve the Aboriginal and Torres Strait Islander adult daily smoking rate (from 47% in 2008).

The excise on tobacco products is to be increased by 12.5% each year from 2017 to 2020, by which point a packet will probably cost $45 or more.

Dennis said anti-smoking campaigns often targeted people belonging to lower-socioeconomic or marginalised groups, and had significant costs but limited success in terms of getting smokers to quit.

She said little was known about why smokers persisted with the habit in spite of warnings, the expense, and unshakeable evidence of the damage to health.

“It’s really hard to ask those questions in a tobacco-controlled space, so we don’t have research on it.”

She said the government needed to involve smokers more in the creation of public health campaigns.

“My research is recommending that we break down barriers between people that are crafting policy and people who are experiencing that policy as smokers,” she said.

“It seems the targets are critical to include as architects if they’re going to bear the brunt of it.”

Her findings have been published in a book, Smokefree, which documents the changing experience of smokers as Australia introduced world leading anti-tobacco laws. She will now pursue further research into third-hand smoke.

Plain cigarette packaging: From Australia with love

Jun 3rd, 2016
by Editor.
No comments yet

http://www.torontosun.com/2016/06/03/plain-cigarette-packaging-from-australia-with-love

Although plain packaging for cigarettes is not part of the Quebec government’s stricter anti-smoking measures that just went into effect, some wish to import the restriction to Canada.

It was also the theme of this year’s World No Tobacco Day, which took place on May 31.

Despite the obvious and serious health hazards of smoking, we should think twice before imitating this Australian innovation.

In Canada, federal health warnings on cigarette packages have existed since 1989, and graphic health warnings since 2001.

They now occupy 75% of the surface of packages, placing Canada 4th in warning size among 77 countries where they are compulsory. But this is not enough for some.

Plain packaging forces tobacco manufacturers to standardize all of their packages using the same nondescript colour, the same size and shape, and no distinctive brand logos, or other design elements.

Australian smokers have been forced to buy cigarettes in plain packages since December 2012. Similar measures are now coming into force in Ireland, France, and the United Kingdom, and are being considered in more than half a dozen other countries. The Canadian government is jumping on the bandwagon, too.

But we should have a close look at the Australian experiment before we take the plunge.

As laudable as it is to want to reduce smoking and people’s exposure to tobacco smoke, it is very far from clear that plain packaging contributes to achieving this goal.

After all, would you stop eating fast food if it came in brown, unbranded boxes with a big picture of a dying fat man?

No statistically significant drop in the proportion of smokers had occurred in any of the five Australian mainland states one year after the implementation of plain packaging. According to a different survey and analysis, the Australian government argues that plain packaging, combined with a newer set of health warnings, is responsible for a drop of half a percentage point in smoking prevalence in the three years following implementation, compared to the three preceding years.

Another Australian government survey, though, indicates that the proportion of smokers among minors actually increased between 2010 and 2013, after two decades of decrease. While not statistically significant, this increase certainly suggests that plain packaging is not having the intended effect.

One possible reason for this is that the debranding of tobacco products through plain packaging may lead consumers to “downtrade” to lower-value brands or to no-brand products. This, in turn, would lower the average price of cigarettes and thereby increase the quantity demanded. There is some evidence that this is happening in Australia, and also that plain packaging has led to an increase in smuggling.

Smoking is already tightly regulated in Canada. It is likely that any additional regulation would have a low marginal benefit (if any), and carry high social costs. In all logic, the burden of proof should rest on the shoulders of plain packaging proponents.

A regulation of this magnitude should only be implemented if the case supporting it is scientifically valid, and this is not what Australia’s experiment shows. In case of doubt, the government should not rush to intervene but, on the contrary, should leave Canadians free to decide.

— Michel Kelly-Gagnon is president and CEO of the Montreal Economic Institute.

TOBACCO PRICE RISE HELPS, NOT HARMS, THE POOR

May 23rd, 2016
by Editor.
No comments yet

Instead of a regressive policy which targets the poor, the ongoing rise in tobacco excise benefits the poor more than it does the rich, say experts.

https://ajp.com.au/news/tobacco-price-rise-helps-not-harms-poor/

Public health physician Dr Nathan Grills and research assistant Nicole Hughes, both with the Nossal Institute for Global Health at the University of Melbourne, argue in MJA InSight today that suggestions the tobacco excise harms low-income people is “a shortsighted analysis and demonstrates a poor understanding of a sophisticated tobacco control intervention”.

“In reality, the policy actually benefits the poor far more than the rich because it is a progressive tax in terms of public health and long-term economic benefit,” the pair write.

“This tax will reduce the long-term financial losses and payments more in lower than in higher socio-economic groups, by reducing medical expenses and protecting livelihoods especially in poorer groups. Ultimately it saves more lives in lower SES groups than in higher SES groups.”

They say that the evidence that increasing the cost of tobacco increases intentions to quit, ultimately resulting in help to quit, is “beyond all reasonable doubt, unless you represent Big Tobacco”.

“Using studies on the effect of price increase on tobacco usage, we can estimate that a 100% price increase (as these excise increases will deliver) will decrease cigarette purchases by around 42%. That is, a price elasticity of –0.42,” the pair write.

Annual tobacco surveys show that taxation has contributed significantly to reducing tobacco use to one of the lowest rates in the world, they say.

And poorer people are more likely to be influenced to quit by an increase in the price of cigarettes, they say: price elasticity is higher among those who have lower incomes.

This is particularly the case for young people, who tend to have lower incomes, because they are less likely to take up the expensive habit in the first place or become addicted.

“Increasing the pack price to $40 will not only save more lives, but it will also protect more livelihoods in low SES groups than in high SES groups,” they write.

“These lower SES groups are often the least able to afford to have their breadwinners sick or dying from tobacco-related illness: a result that happens more often than not for those who are long-term smokers.”

Victoria to treat e-cigarettes the same as tobacco products

May 21st, 2016
by Editor.
No comments yet

Under-18s will be banned from buying the electronic smoking devices as part of new legislation to be introduced into parliament next week

https://www.theguardian.com/society/2016/may/21/victoria-to-treat-e-cigarettes-the-same-as-tobacco-products

Under-18s will be banned from buying e-cigarettes as part of new Victorian legislation that will treat the electronic smoking devices the same as tobacco products.

All existing bans on the sale, use and promotion of tobacco products will also apply to e-cigarettes in Victoria, under changes to be introduced into parliament next week.

Smoking e-cigarettes in schools or cars carrying children will be outlawed.

The health minister, Jill Hennessy, said the new legislation would help de-normalise the harmful habit and protect children.

The laws will apply to all e-cigarettes regardless of whether they contain nicotine because laboratory testing is often needed to determine if nicotine is present.

The legislative changes will also include a ban on smoking in outdoor dining areas, which will come into effect on 1 August next year.

Any food fair or organised outdoor events where there are food stalls will come under the ban.

Events devoted to food, such as the Night Noodle Market, will be smoke free, while an outdoor festival, like Moomba, will not be subject to the ban, but smoking will not be allowed within 10 metres of a food stall.

Hennessy said the changes were about protecting Victorians from second-hand smoke and changing the culture around smoking.

“People would be really outraged if someone lit up a ciggie in a restaurant and I think that shows how important it is to change the cultural norms about where and how people smoke,” Hennessy said.

“Four thousand Victorians still die every year of tobacco related illness.”

Fines of more than $150 will apply to people caught smoking in outdoor areas.

“Ultimately we want social norms of where people smoke to change,” Hennessy said.

Customs officials allegedly involved in drug and tobacco smuggling

May 19th, 2016
by Editor.
No comments yet

http://www.smh.com.au/national/customs-officials-involved-in-drug-and-tobacco-smuggling-20160518-goy672.html

A network of Australian border security officials is allegedly working for organised criminals, including drug and tobacco smugglers, in the most serious corruption scandal to ever hit the nation’s border agencies.

A Fairfax Media investigation has uncovered multiple cases of alleged corruption involving staff from the Australian Border Force and the Department of Agriculture, along with maritime industry employees with government clearances.

In response to the revelations, the Department of Immigration and Border Protection and the Australian Border Force said they were “working actively with law enforcement partners to investigate allegations of serious criminality by its officers at the border”.

Police on Wednesday arrested a Department of Agriculture compliance assessment officer, Richard Vong, over alleged links to organised criminals, including a syndicate led by suspected Melbourne drug trafficker Jimmy Chhav. They also raided his house.

Mr Vong will face court on Thursday charged with trafficking and possessing a drug of dependence, knowingly dealing in the proceeds of crime, dealing in property reasonably suspected of being the proceeds of crime and theft of Commonwealth property. A female official has been charged with knowingly dealing in the proceeds of crime and dealing in property reasonably suspected of being the proceeds of crime.

The allegations come as the government makes a virtue of its strength on border security, with Prime Minister Malcolm Turnbull claiming the opposition “lack the commitment to keep our borders secure”.

However, the federal government and customs chiefs, including the nation’s top border security official, Michael Pezzullo, have been repeatedly warned over four years in high-level confidential briefings about significant suspected corruption in the Border Force’s ranks, especially in NSW.

Evidence, including NSW police briefing notes and testimony from crime figures, suggests that one of the most vital border security facilities, the NSW Customs Examination Facility, has been compromised by corrupt insiders, enabling criminals to import large amounts of drugs and tobacco undetected. Staff at the facility are responsible for searching containers suspected to contain contraband.

A small network of Department of Agriculture officials responsible for clearing imports into Australia have also been assisting and liaising with known drug traffickers for at least the past five years.

This network is allegedly led by Mr Vong, a suspected corrupt Department of Agriculture official, who works out of Customs House in Melbourne. The department missed multiple warnings about Mr Vong and some of his colleagues.

Fairfax Media has delayed reporting on the border corruption scandal for several months at the request of authorities.

In NSW, evidence uncovered by Fairfax Media from multiple sources, including agency officials, government briefing files and figures with underworld ties, implicates Border Force officials in drug and tobacco trafficking, and leaking to the criminal underworld.

Criminal intelligence suggests one officer has been taking kickbacks of hundreds of thousands of dollars from traffickers, while another has been facilitating importations.
Suspected corrupt officers are still operating.

The latest scandal comes three years after a network of corrupt customs officers was identified at Sydney airport and charged by the federal police. At the time, Mr Pezzullo promised sweeping reforms, including many which have been implemented.

Top security and policing officials, along with corruption experts, called for the nation’s federal police watchdog, the Australian Commission for Law Enforcement Integrity (ACLEI) to have its budget dramatically increased and said the Australian Border Force had failed to deal with corruption in its ranks.

Leading corruption expert and former senior judge Stephen Charles, QC, said ACLEI – which, with about 20 investigators out of a total of 55 staff, is among the smallest corruption fighting agencies in Australia – was badly outgunned. Mr Charles said Australia needed an anti-corruption agency with hundreds of staff.

“It [ACLEI] needs to be ten-drupled,” a law enforcement agency source said.

Fairfax Media can also reveal that officers from the joint state and federal Polaris waterfront crime taskforce in NSW, which has played a key role in identifying corruption on the docks, were last week told they would be shut down due to a lack of funding. State police are furious, but federal government sources insist the funding has been reallocated to other anti-organised crime taskforces.

One briefing describes how a veteran customs officer who has previously worked closely with the AFP and the NSW Crime Commission is suspected of leaking “sensitive information” to drug and tobacco importers. A customs officer is also named as having travelled overseas with a suspected criminal.

Property records obtained by Fairfax Media reveal this customs officer, who was on long-term sick leave, lives next door to the suspected criminal in the Sydney suburb of Sylvania Waters.

The border security scandal comes three years after the Sydney airport customs corruption scandal, in which a network of corrupt customs officers led by customs officer Adrian Lamella were trafficking drugs using couriers on international flights.

The reforms implemented by Mr Pezzullo and the federal government after the Sydney airport scandal appear to have failed to stop significant corruption in the agency.

One senior government source said the Australian Border Force was “incapable” of eradicating corruption in its ranks and sometimes dealt with internal integrity issues with departmental sanctions, such as demotion or sacking, rather than by conducting intensive probes that could expose corrupt networks.

The Department of Agriculture section involved in Mr Vong’s alleged corrupt network was formerly named the Australian Quarantine Inspection Service.

AQIS senior managers were first warned that organised criminals had infiltrated the agency’s ranks in 2012, when an officer was identified, and later charged, for leaking information to a drug importation syndicate.

Information outlining Mr Vong’s alleged links to suspected drug trafficker Jimmy Chhav has been held by various law enforcement agencies for several years, but it is unclear if it was ever formally passed to the Department of Agriculture. However, the department had its own information linking the pair which was never acted upon.

In April 2012, Fairfax Media first reported Australia’s maritime borders were badly exposed to corruption and that a confidential Operation Polaris report had found that “serious organised crime groups are able to access and exploit key Australian government officers.”

“Polaris investigations have identified employees of law enforcement and regulatory bodies providing assistance to criminal groups. This assistance is less common but of higher consequence than private sector corruption. The employees have included members of customs and employees of AQIS.

“Operation Polaris has also determined the government’s Maritime Security Identification Cards – required by tens of thousands of Australians who work in the industry – have failed to stop organised crime infiltration.

“Multiple MSIC holders are involved in drug activity and are subject to substantial intelligence holdings detailing their criminal activity and criminal associates.”

Stephen Charles, QC, a former Victorian Court of Appeals judge and an expert in anti-corruption agencies, said watchdog ACLEI was unable to combat public sector corruption outside of several policing agencies.

Mr Charles, who recently gave testimony to a Senate committee about the need for the establishment of a national anti-corruption agency, said ACLEI’s staff had good intentions but had limited investigative and jurisdictional capacity.

The federal government has recently passed laws to ensure that people with criminal histories are not giving the government security clearance to work on the waterfront or at airports.

Liberal frontbencher Josh Frydenberg said on Thursday morning that the allegations were being dealt with appropriately.

“Such behaviour will not be tolerated and we’ll take every possible measure to ensure that those people, if they have behaved in a way that is criminal, face the appropriate justice system,” he told ABC TV.

The Department of Immigration and Border Protection said in a statement that although it and the Australian Border Force were “unable to comment on the status of current investigations”, it could confirm that it had been working “in partnership with ACLEI”.

​It said Taskforce Pharos, an internal taskforce set up following the corruption scandal at Sydney airport to target corruption “within the border environment”, continued to operate and had been instrumental in referring matters to ACLEI for further investigation.

“In addition, the Department has provided supplemental funding to ACLEI to ensure matters relating to its own officers can be fully and independently investigated.”

 

The tobacco industry is not happy with the way Australia got its residents to quit smoking

May 19th, 2016
by Editor.
No comments yet

http://uk.businessinsider.com/the-tobacco-industry-is-not-happy-with-the-way-australia-got-its-residents-to-quit-smoking-2016-5

Tobacco juggernaut Philip Morris is pissed about Australia providing people with truthful advertising, so it sued the country in secret.

In 2012, Australia moved to remove all branding from cigarette packs, replacing them instead with plain-label packages displaying smoking harms — a move copied by France and Britain.

According to a 2015 report from the Australian Bureau of Statistics, tobacco consumption has fallen nearly 3%, the Guardian reported — potentially as a result of the plain-label legislation.

“The minister welcomes any decrease in smoking rates and believes several factors have likely contributed, including education campaigns, excise increases and plain packaging,” Fiona Nash, a spokeswoman for the assistant health minister, told the Guardian in 2015.

Philip Morris tried to fight back by suing on the grounds of “an abuse of rights,” according to the Guardian.

But after a 2015 closed-door hearing held in Singapore, the presiding tribunal decided the Morris claims were “inadmissible” and “precluded from exercising jurisdiction over this dispute.”

The best part is that companies like Philip Morris have tried legal routes like this before, claiming — no kidding — “the new rules impinge on their trademark intellectual property,” according to a MedicalX press release.

By which they probably meant, “It’s hard to sell cigarettes when you show people what cigarettes actually do.”

Fortunately, because Australia has its priorities straight, Nash concluded, “Plain packaging is a legitimate public health measure which is consistent with Australia’s international legal obligations.”

Australia versus Philip Morris. How we took on big tobacco and won

May 17th, 2016
by Editor.
No comments yet

http://www.smh.com.au/federal-politics/political-news/australia-versus-philip-morris-how-we-took-on-big-tobacco-and-won-20160517-gowwva.html

Previously sealed documents reveal the tobacco giant Philip Morris lost its case against Australia over plain packaging because the international tribunal considered it an “abuse of rights”.

Philip Morris sued Australia under the provisions of an obscure Hong Kong Australia investment treaty in 2012 after British American Tobacco and Japan Tobacco lost a challenge to the plain packaging legislation in the High Court.

As had its competitors in the failed High Court challenge, the manufacturer of Marlboro and Longbeach cigarettes argued Australia had confiscated its trade marks, turning from “a manufacturer of branded products to a manufacturer of commoditised products”.

Philip Morris wanted the tribunal to order Australia to withdraw the law or to award damages of at least $US4.2 billion plus compound interest at the Australian bank cash management rate dating back to the to the law’s introduction.

Its use of an outside tribunal rather than an Australian court to sue the government was unusual, in that it was making use of a provision available to foreign companies under trade agreements but denied to Australian companies.

The government spent more than $50 million defending the case, assembling a team including two Queens Counsels and two Senior Counsels and ferrying to Singapore witnesses including the former treasurer Wayne Swan and former judge Roger Gyles QC.

The 186-page judgement, unsealed on Tuesday, shows the tribunal rejected the claim at the first hurdle, finding Philip Morris had moved its Australian and Asian headquarters to Hong Kong for the express purpose of making the claim.

“The tribunal cannot but conclude that the initiation of this arbitration constitutes an abuse of rights, as the corporate restructuring by which the claimant acquired the Australian subsidiaries occurred at a time when there was a reasonable prospect that the dispute would materialise and as it was carried out for the principal, if not sole, purpose of gaining treaty protection,” the judgement finds.

A spokesman for assistant health minister Fiona Nash said she welcomed the decision which validated the government’s decision to take on Philip Morris.

Originally rare, the use of so-called investor-state dispute settlement provisions in international treaties has ballooned in the past decade. Australia’s Productivity Commission counted 42 in 2014.

Productivity Commission count of iinvestor-state dispute settlement cases

Productivity Commission count of iinvestor-state dispute settlement cases

Investor-state dispute settlement provisions have been included in Australia’s recently-signed treaties with Korea and China and the 12-nation Trans-Pacific Partnership which has been signed but not yet ratified by the Australian parliament.

La Trobe University public health academic Deborah Gleeson said the victory would add to momentum for the spread of plain packaging legislation around the world, but she said it didn’t mean that investor-state dispute settlement provisions weren’t a threat to public health.

“If we ratify the Trans-Pacific Partnership transnational corporations based in the United States will gain an avenue to sue Australia. There’s an exclusion for tobacco control measures, but no solid exclusion for other health measures.”

Australia continues to face challenges to its plain packaging laws in the World Trade Organisation from tobacco-growing nations including Cuba, the Dominican Republic, Honduras and Indonesia. The Ukraine withdrew its challenge last year.

← Earlier Posts Newer Posts →