Time to Quit? Assessing International Investment Claims Against Plain Tobacco Packaging in Australia

Tania S. Voon

Melbourne Law School

Andrew D. Mitchell

Melbourne Law School; Georgetown University Law Center

August 11, 2011
Abstract:
The Australian federal government recently introduced into Parliament legislation mandating the plain packaging of all tobacco products. Tobacco companies and others have raised various legal concerns with this tobacco control scheme, both at a domestic level in relation to constitutional and intellectual property law, and at an international level in relation to international economic law. Some Members of the World Trade Organization (‘WTO’) have asked questions about the scheme in the WTO Committee on Technical Barriers to Trade and the Council for Trade-Related Intellectual Property Rights. In addition, Philip Morris (Asia) Limited has given notice of an investor-State dispute settlement claim against Australia regarding plain packaging pursuant to the Hong Kong – Australia Bilateral Investment Treaty. This article considers the merits of that claim as well as certain related procedural issues. It also compares Australia’s investment obligations with respect to plain packaging under the Australia – United States Free Trade Agreement, as some allegations have been made that plain packaging is inconsistent with those obligations.

IV CONCLUSION

Several impediments exist to PMA’s claim, including the possibility that it has been brought prematurely, the remaining chance (against that background) for Australia and Hong Kong to modify or re-interpret the terms of the Hong Kong – Australia BIT, and the potential difficulties of enforcing an adverse arbitral award against Australia due to concerns of public policy and sovereign immunity. More importantly, most of PMA’s substantive claims under the Hong Kong – Australia BIT appear weak, in particular as regards fair and equitable treatment, full protection and security, unreasonable impairment, and the umbrella clause. PMA may have stronger arguments in relation to Australia’s obligation not to engage in expropriation, but a number of relevant factors still weigh in favour of Australia’s plain packaging measure as a legitimate noncompensable health regulation rather than a compensable expropriation. The outcome of that claim is likely to depend on the final form of the legislation that is enacted and implemented, as well as the evidence brought to bear by both sides and the arbitrators selected to make the decision. In the meantime, the AUSFTA provides a contrasting case study demonstrating the kind of clarifications that Australia, Hong Kong and other countries may wish to consider adding to their more traditional investment protection agreements if they wish to ensure control over their sovereign regulatory frameworks for purposes such as health and the environment. The AUSFTA also offers an example of excluding ISDS, which Australia is contemplating on a broader scale and which may be desirable for a number of countries.

Number of Pages in PDF File: 35

Keywords: Investment, international law, tobacco, cigarettes, bilateral investment treaty, international dispute settlement

JEL Classifications: K33, F21, L66

Working Paper Series

Date posted: August 11, 2011

Suggested Citation

Voon, Tania S. and Mitchell, Andrew D., Time to Quit? Assessing International Investment Claims Against Plain Tobacco Packaging in Australia (August 11, 2011). Available at SSRN: http://ssrn.com/abstract=1906560
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