https://au.news.yahoo.com/thewest/wa/a/29064155/tobacco-giant-sues-australia/
More than $50 million of taxpayer money is expected to go up in smoke defending cigarette plain packaging in a secretive international tribunal in Singapore.
But costs will pile much higher if Australia loses on its first defence that Philip Morris indulged in cynical “venue shopping” by shifting its headquarters to Hong Kong to sue Australia.
The West Australian can reveal the Attorney-General’s Department, which is running the case in defence of plain packaging, called former Labor treasurer Wayne Swan as a witness before a special tribunal sitting in Singapore back in February.
Philip Morris, which is claiming the plain packaging regime harms its intellectual property in such famous brands as Marlboro, Peter Jackson and Longbeach, called its own high-profile witnesses, also at considerable cost.
Among Philip Morris’ witnesses have been former High Court judge Ian Callinan who gave evidence on administrative law.
If the tribunal finds unfavourably against Australia in a preliminary decision, expected in September, former health minister Nicola Roxon and her former departmental secretary Jane Halton are among those likely to be hauled before the tribunal later this year.
Australia argues that Philip Morris, in anticipation of Labor’s plain packaging legislation in 2011, restructured itself so that its Australian subsidiary became wholly owned by the Hong Kong-based Philip Morris Asia.
This allowed Philip Morris to sue Australia under so-called investor-state dispute settlement (ISDS) provisions of a 1993 bilateral agreement with Hong Kong that allowed compensation for “expropriation” of investments.
ISDS provisions have been criticised by the High Court Chief Justice Robert French and the Productivity Commission which warned they gave foreigners greater legal rights than Australian companies, exposed local business to potentially large liabilities and were red tape-heavy.
There are concerns similar provisions in the yet-to-be-concluded 12-nation Trans-Pacific Partnership agreement, it would constrain the listing and pricing of medicines under the Pharmaceutical Benefits Scheme.
Trade Minister Andrew Robb dismissed ISDS concerns, stressing Australia was party to ISDS provisions with 29 other countries over three decades, “and the sun has still come up”.
Labor, which formally discontinued inclusion of ISDS provisions in free trade agreements in 2011, said Australians were understandably concerned about foreign interference in healthcare, public services and environmental protection.
“The tobacco plain packaging case highlights the dangers of ISDS provisions,” shadow trade minister Penny Wong said.
“Mr Robb has still not explained why he agreed to the inclusion of an ISDS in the China FTA when the Howard Government successfully negotiated the US FTA without one.”
Mr Robb responded: “The only case that has ever been brought against Australia was in response to Labor’s cigarette plain packaging laws. Australia was defending this case and it was not yet resolved.”
He said ISDS provided protections for Australian investors abroad in countries which may not have reliable political or legal systems.
It is understood that under the China-Australia FTA, the scope, form and content of the future ISDS mechanism is yet to be negotiated.
A spokesman for Philip Morris said governments has the right to “experiment” with taxpayers’ money but should not be surprised when companies and countries asserted their rights.
“Philip Morris is seeking compensation from the Australian Government for its plain packaging experiment which deprives us of our brands and intellectual property, and for treating Philip Morris and its investments unfairly and inequitably through changing arbitrarily our legal and regulatory environment,” the spokesman said.
“Our claims address the unlawfulness of the expropriation of property and do not question the need for comprehensive regulation of tobacco products.”