tag:theconversation.com,2011:/us/topics/hong-kong-bit-3584/articlesHong Kong BIT – The Conversation2012-08-28T20:05:35Ztag:theconversation.com,2011:article/89682012-08-28T20:05:35Z2012-08-28T20:05:35ZAn affront to the rule of law: international tribunals to decide on plain packaging<figure><img src="https://images.theconversation.com/files/14620/original/v68cqvb2-1345784128.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new off-shore phase of jurisprudence has the potential to undermine national authorities.</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>The Australian High Court has found that the Gillard Government’s <a href="http://www.comlaw.gov.au/Details/C2011A00148">Tobacco Plain Packaging Act 2011</a> does not breach that section of the constitution that prohibits federal legislation acquiring property except on just terms. But the authority of the High Court may be challenged by international trade and investment processes that contest the rule of law not only in this country, but globally. </p>
<p>The federal plain packaging legislation was enacted in compliance with obligations under international law embodied in the World Health Organization’s (WHO) <a href="http://www.who.int/fctc/about/en/index.html"><em>Framework Convention on Tobacco Control</em></a>. In reaching its <a href="http://www.hcourt.gov.au/assets/publications/judgment-summaries/2012/hca30-2012-08-15.pdf">decision</a>, the High Court was fulfilling the constitutional role allocated to it under a social contract entered into by the Australian people in 1901. </p>
<p>This compact has since been reinforced by acceptance and implementation of such decisions and the process behind them for over a century by Australian federal and state politicians, judges and the general populace. A central part of the contract is that Australia will be governed by a rule of law, with its implicit predictability and certainty. </p>
<p>Australian taxpayers (through their governments) have invested an enormous amount of time and resources in creating a system of governance predicated on the capacity of a non-corrupt judiciary to decide on disputes by fairly interpreting laws promulgated in advance in public. </p>
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<img alt="" src="https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14567/original/zt5wvrc4-1345698709.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">jerik0ne/Flickr</span></span>
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<p>Foreign corporations operating in Australia benefit from such an equitable governance structure. Indeed, it is one of the primary reasons they invest here. Australia regularly ranks very highly in rule of law rankings of nations around the world. And as legal scholar Brian Tamanaha reminds us in one of the seminal works on the subject, “No other single political ideal has ever achieved global endorsement.”</p>
<p>Yet Australia is about to confront, for the first time, the possibility that a decision of the highest court in our land will in effect be overturned by off-shore tribunals with only a tenuous connection to Australian legal traditions. Such off-shore investment tribunals are not accountable to the Australian populace and have extremely limited capacity to refer to governance arrangements directly endorsed by Australian citizens.</p>
<h2>Unaccountable tribunals</h2>
<p>On 13 March 2012, Ukraine requested consultations in the <a href="http://www.wto.org/index.htm">World Trade Organisation (WTO)</a> with Australia concerning Australia’s <a href="http://www.comlaw.gov.au/Details/F2011L02644"><em>Tobacco Plain Packaging Act</em> 2011 and its implementation</a>.</p>
<p><a href="http://www.wto.org/english/news_e/news12_e/ds434rfc_13mar12_e.htm">Ukraine’s argument</a> is that Australia’s plain packaging legislation breaches various provision of the WTO <a href="http://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm"><em>Trade Related Intellectual Property</em> (TRIPS) Agreement</a>; the <a href="http://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm"><em>Technical Barriers to Trade</em> (TBT) Agreement</a>; and the <a href="http://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm"><em>General Agreement on Tariffs and Trade</em>(GATT) 1994</a>. Interestingly, there’s no mention of the WTO being required to take the WHO and its <a href="http://www.who.int/fctc/text_download/en/"><em>Framework Convention on Tobacco Control</em></a> into account in this consultation.</p>
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<img alt="" src="https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14551/original/hvydp4sr-1345687217.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The World Health Organisation (WHO) has not been offered a voice in the debate.</span>
<span class="attribution"><span class="source">US Mission Geneva/Flickr.</span></span>
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<p>In another potential challenge, the multinational tobacco company <a href="http://www.pmi.com/eng/pages/homepage.aspx">Phillip Morris</a> has re-badged itself for this purpose as an Asian company based in Hong Kong and lodged an investor-state complaint against the Australia under the <a href="https://theconversation.com/why-bilateral-investment-treaties-are-the-last-refuge-of-big-tobacco-8880"><em>Hong Kong-Australia Bilateral Investment Treaty</em> (BIT)</a>.</p>
<p>Unlike the WTO dispute, this will not involve a standing body but will allow an <em>ad hoc</em> gathering of three trade arbitrators to rule (without the requirement of exhausting local remedies and without prospect of appeal) on whether Australia has to pay damages to this tobacco company for passing legislation found to be constitutional and a fulfilment of Australia’s international legal obligations under a WHO treaty. </p>
<p>Such disputes may only be the beginning of a new off-shore phase of jurisprudence with the potential to undermine the authority of the High Court and the rule of law in Australia.</p>
<h2>Unaccountable arbitrators</h2>
<p><a href="http://www.pmi.com/eng/pages/homepage.aspx">Philip Morris International</a> has lobbied the <a href="http://www.ustr.gov/">US Trade Representative (USTR)</a> to include investor state dispute settlement in the <a href="https://theconversation.com/a-mercurial-treaty-the-trans-pacific-partnership-and-the-united-states-7471">Trans Pacific Partnership Agreement</a> (TPPA). On 12 June 2012, <a href="http://www.huffingtonpost.com/2012/06/13/obama-trade-document-leak_n_1592593.html">a leaked copy</a> of the investment chapter for the TPPA confirmed its provisions would allow foreign firms to skirt Australian domestic courts and laws to directly sue our government in the <a href="http://icsid.worldbank.org/ICSID/Index.jsp">International Centre for the Settlement of Investment Disputes (ICSID)</a>. </p>
<p>Arbitrators would be paid by the hour (often over several years of proceedings), could act as a legal representative in one case and an arbitrator in another, and would have vested financial interests in verdicts for corporations. Governments cannot initiate suits before this tribunal. </p>
<p>They would not be required to take the constitutional, legislative or international human rights context (including standard legal due process procedures) into account, or maintain a public record of their decisions. All of this undermines their capacity to claim they are part of the rule of law.</p>
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<img alt="" src="https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14550/original/zm555vwq-1345686911.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Australian High Court could have its role usurped.</span>
<span class="attribution"><span class="source">John O'Neill/Wikimedia Commons.</span></span>
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<h2>Defending the rule of law</h2>
<p>The capacity of these three types of tribunals to potentially have the final say on such an important public health issue (as well as those likely to face future generations of Australians in areas such as environmental sustainability and financial sector stability) is a direct affront to the rule of law, not only in this country but globally. </p>
<p>The leaked TPPA text would even provide investors with a right to demand compensation for “indirect” expropriation <a href="http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf">(Article 12.12)</a> and allow foreign investors to claim government actions (such as the plain packaging laws) require technically unlimited financial compensation because of a slightly higher burden in complying with the law <a href="http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf">(Article 12.4 and 12.5)</a>. Such proposals give foreign investors (such as tobacco multinationals) greater rights than domestic investors.</p>
<p>In its April 2011 trade policy statement, the Australian Government vowed to no longer include provisions on “investor-state dispute settlement” in bilateral and regional trade agreements that it signs. Australia deserves high praise for refusing to agree to a TPPA investor state provision. But it’s surprising that the various Australian law councils haven’t taken up the issue and supported the federal government’s stance in favour of preserving from such threats the rule of law in this country.</p><img src="https://counter.theconversation.com/content/8968/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Faunce receives funding from Australian Research Council (ARC) under a Future Fellowship focused on Nanotechnology and Global Public Health. He is also a chief investigator on ARC grants involved with encouraging Australian legislation based on the model of the US False Claims Act (with Dr Gregor Urbas) and on military uses of Nanotechnology (With Dr Hitoshi Nasu).</span></em></p>The Australian High Court has found that the Gillard Government’s Tobacco Plain Packaging Act 2011 does not breach that section of the constitution that prohibits federal legislation acquiring property…Thomas Faunce, ARC Future Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/88552012-08-15T20:43:36Z2012-08-15T20:43:36ZGovernment wins first battle in plain packaging war<figure><img src="https://images.theconversation.com/files/14288/original/75k89hjb-1345012463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Attorney-General Nicola Roxon and Health Minister Tanya Plibersek take questions after the High Court decision.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>The government and health advocates are deservedly celebrating the High Court decision on plain packaging. But tobacco companies have been quick to note that while they’ve lost a key battle, they intend to continue fighting the war.</p>
<p>A Philip Morris spokesperson <a href="http://www.google.com/hostednews/afp/article/ALeqM5gOxo1TDuaxGEh2-F1hQ550LVzhUw?docId=CNG.22765a1f351941e129fc2ca74a287a12.11">reportedly stated</a> that the High Court decision would have “no legal bearing” on the cases pending in the <a href="http://www.wto.org/">World Trade Organization (WTO)</a> or on its <a href="http://www.ag.gov.au/Internationallaw/Pages/Investor-State-Arbitration---Tobacco-Plain-Packaging.aspx">challenge</a> under the <a href="https://theconversation.com/big-tobacco-v-australia-taking-the-battle-to-the-global-stage-2027">Hong Kong–Australia bilateral investment treaty</a>. </p>
<p>This statement underestimates the extent of the deference shown to domestic courts by international tribunals. But it’s true that the decision doesn’t preclude these cases from proceeding or guarantee that the government will prevail in them.</p>
<h2>Investor-state dispute settlement</h2>
<p>The investor-state dispute under the Hong Kong treaty is particularly concerning for supporters of the legislation. Unlike the WTO, there’s no exception under the treaty for public health measures. And unlike in the Australian Constitution, “expropriation” (the act of a government taking private property) is defined very broadly. </p>
<p>Although detailed reasoning has not yet been provided, the High Court appears to have agreed with the government’s argument that it hasn’t acquired any property from tobacco companies. Unfortunately, under international investment law, the direct acquisition of property is not necessary to trigger the requirement for compensation. If a government measure has a significant impact on an investment (such as a negative effect on the investor’s profits), a tribunal may decide in favour of that investor.</p>
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<img alt="" src="https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14291/original/jqng44t4-1345014164.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Yesterday’s High Court decision is just one battle in the war over plain packaging.</span>
<span class="attribution"><span class="source">mejilopezvazquez/Flickr</span></span>
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<p>This difference between domestic and international law clearly demonstrates how foreign investors are currently provided greater rights under international investment treaties than domestic firms are accorded under Australian law. The Gillard government rightly decided last year that this is inappropriate and <a href="http://www.dfat.gov.au/publications/trade/trading-our-way-to-more-jobs-and-prosperity.html">announced</a> that it would no longer agree to investor-state dispute settlement procedures in trade or investment agreements. But existing treaties – such as the one with Hong Kong – still expose the government to liability.</p>
<h2>Distorted rules</h2>
<p>Philip Morris’ plan to proceed with its investor-state dispute despite yesterday’s ruling highlights the extent to which the investment arbitration system has been distorted by corporate interests since it was first developed in the 1960s.</p>
<p>Originally, the system was meant to provide protection for investors operating in countries where the rule of law was absent or where court systems were considered corrupt or biased against foreigners. Now, disgruntled corporations such as Philip Morris, who’ve had their day in court and have been treated fairly in a transparent and accountable manner, are utilising the arbitration system as a supranational court of appeal.</p>
<p>The government has very strong arguments on its side but outcomes in investment arbitration are notoriously hard to predict. There’s no system of basing decisions on precedents and case law is both recent and inconsistent.</p>
<p>And the government could be forced to pay very large legal costs and arbitration fees, even if it wins the case. The High Court has apparently awarded all costs to the government. This also happens on occasion in investment arbitration, but there are no strict rules about the division of costs between winners and losers.</p>
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<img alt="" src="https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14292/original/xp4jgs64-1345014595.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The investor-state dispute settlement procedure in the Australia-Hong Kong bilateral investment treaty is the next battleground.</span>
<span class="attribution"><span class="source">Desmond Elliott</span></span>
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<h2>Public vs corporate interests</h2>
<p>Still, the government should, without a doubt, continue to defend the legislation. It’s legal fight is about far more than the public health system in this country and the millions of people who have been negatively affected by tobacco products. It’s fundamentally about the right of governments to regulate in the public interest and the role of international institutions in constraining the behaviour of sovereign states.</p>
<p>The government also should maintain its policy against the inclusion of investor-state dispute settlement procedures in trade and investment agreements. It’s under enormous pressure to abandon this policy in the current negotiations for a <a href="http://aftinet.org.au/cms/trans-pacific-partnership-agreement/leaked-tppa-trade-chapter-australia-says-no-investor-rights-sue-">Trans-Pacific Partnership Agreement</a>. And it has recently been <a href="https://theconversation.com/accis-right-to-sue-campaign-not-supported-by-the-facts-8800">criticised</a> for this at home by the <a href="http://www.acci.asn.au/">Australian Chamber of Commerce and Industry</a>.</p>
<p>The Philip Morris case perfectly highlights the many problems with investment arbitration, while the purported benefits of the system remain unproven.</p>
<p>The government has shown itself to be a trailblazer in the area of tobacco regulation and many other countries look set to emulate the plain packaging policy, especially in light of yesterday’s victory in the High Court. It is now also leading the way in rejecting systems of international arbitration that enhance corporate power at the expense of democracy. It seems inevitable that other countries will follow suit in this domain as well.</p>
<p><br></p>
<p><em>Read other articles on plain packaging published since the High Court decision:</em></p>
<ul>
<li><p>On what this decision means for tobacco companies - <a href="https://theconversation.com/big-tobacco-crashes-at-first-legal-hurdle-on-plain-packaging-8807">Big Tobacco crashes at first legal hurdle on plain packaging</a></p></li>
<li><p>On what this means for other countries wanting to introduce plain packaging and the WHO - <a href="https://theconversation.com/the-olive-revolution-australias-plain-packaging-leads-the-world-8856">The Olive Revolution: Australia’s plain packaging leads the world</a></p></li>
<li><p>On why Philip Morris is using the Australia-Hong Kong BIT to try to stop plain packaging - <a href="https://theconversation.com/why-bilateral-investment-treaties-are-the-last-refuge-of-big-tobacco-8880">Why bilateral investment treaties are the last refuge of Big Tobacco</a></p></li>
</ul><img src="https://counter.theconversation.com/content/8855/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kyla Tienhaara does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government and health advocates are deservedly celebrating the High Court decision on plain packaging. But tobacco companies have been quick to note that while they’ve lost a key battle, they intend…Kyla Tienhaara, Research Fellow Regulatory Institutions Network (RegNet), Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/88562012-08-15T05:34:10Z2012-08-15T05:34:10ZThe Olive Revolution: Australia’s plain packaging leads the world<figure><img src="https://images.theconversation.com/files/14268/original/ff6c2qqb-1345005124.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The High Court has ruled the enforcing plain packaging is constitutionally legal.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>After much <a href="https://theconversation.com/tobaccos-mad-men-threaten-public-health-3450">political debate</a>, the Australian Parliament passed the <a href="http://www.comlaw.gov.au/Details/C2011A00148">Tobacco Plain Packaging Act 2011 (Cth)</a>. Australian legislators, such as Richard di Natale, provided moving accounts for the need for plain packaging of tobacco products.</p>
<p>The legislation requires tobacco products to feature standard olive-coloured plain packaging with large health warnings. Naturally, Big Tobacco retaliated with a legal challenge.</p>
<p>And after <a href="https://theconversation.com/big-tobaccos-box-fetish-plain-packaging-at-the-high-court-6518">epic litigation</a>, the <a href="http://www.hcourt.gov.au/assets/publications/judgment-summaries/2012/hca30-2012-08-15.pdf">High Court of Australia</a> earlier today issued orders ruling that “at least a majority of the judges” are of the view the plain packaging regime is valid under the <a href="http://www.comlaw.gov.au/Details/C2004C00469"><em>Australian Constitution</em></a>. </p>
<p>The High Court rejected the arguments of Big Tobacco that there was an acquisition of property on less than just terms. This ruling is in line with precedents on constitutional law and intellectual property such as <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2000/14.html">the Grain Pool case</a>, <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1994/27.html">the Nintendo case</a>, and the <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2012/8.html">recent Phonographic ruling</a>. The High Court will provide reasons for the decision at a later date – before the retirement of Justice Gummow, an eminent judge on matters of intellectual property.</p>
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<h2>Setting a precedent</h2>
<p>The decision in <a href="http://www.hcourt.gov.au/cases/case-s389/2011"><em>JT International SA</em> v <em>Commonwealth</em></a> and <a href="http://www.hcourt.gov.au/cases/case-s409/2011"><em>British American Tobacco Ltd</em> v <em>Commonwealth</em> [2012] HCA 30</a> will be an important precedent in Australia and the rest of the world.</p>
<p>Domestically, the Attorney-General Nicola Roxon and the Health Minister Tanya Plibersek have <a href="http://www.canberratimes.com.au/opinion/political-news/big-tobacco-loses-high-court-battle-over-plain-packaging-20120815-247kz.html">hailed the decision a victory for public health.</a> “This is a victory for all those families who have lost someone to a tobacco related illness. No longer when a smoker pulls out a packet of cigarettes will that packet be a mobile billboard,” Roxon said.</p>
<p>The High Court is a well-respected superior court, with great expertise in the field of intellectual property. The ruling is consistent with other superior courts dealing with questions of tobacco control. In a 2007 case, <a href="http://scc.lexum.org/en/2007/2007scc30/2007scc30.html">Attorney General v JTI-MacDonald Corp</a>, the Supreme Court of Canada noted: “When commercial expression is used … for the purpose of inducing people to engage in harmful and addictive behaviour, its value becomes tenuous.” </p>
<p>And in 2012, the <a href="http://www.saflii.org/za/cases/ZASCA/2012/107.html">South African Supreme Court</a> defended regulations on tobacco advertising under the <a href="http://www.who.int/fctc/en/">WHO Framework Convention on Tobacco Control</a>.</p>
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<h2>The World Health Organization</h2>
<p>The High Court ruling is also a boost for the <a href="http://www.who.int/">World Health Organization (WHO)</a> and its Framework Convention on Tobacco Control. The WHO has been deeply concerned about the impact of the <a href="http://www.who.int/tobacco/global_report/2011/en/">tobacco epidemic</a> around the world, observing, “Tobacco is without doubt the single most preventable cause of death in the world today. It is the only legal consumer product that kills up to half of those who use it as intended and recommended by the manufacturer.”</p>
<p>The WHO Framework Convention on Tobacco Control recognises that member states are “seriously concerned about the impact of all forms of advertising, promotion and sponsorship aimed at encouraging the use of tobacco products.” Article 11 of the Convention deals with the packaging and labelling of tobacco products and Article 13 addresses tobacco advertising, promotion and sponsorship. The guidelines endorse plain packaging as a means of implementing the Convention.</p>
<p>The WHO has strongly supported the Australian Government’s policies on plain packaging. It has expressed the view that the legislation “will achieve its stated goals of: reducing the attractiveness and appeal of tobacco products to consumers, particularly young people; increasing the noticeability and effectiveness of mandated health warnings; and reducing the ability of the tobacco product packaging to mislead consumers about the harms of smoking.”</p>
<p>Nicola Roxon received a special award from the WHO for “her unwavering leadership” in the field of health. And for World No Tobacco Day in 2012, the WHO disseminated videos, lauding Australia’s regime for the plain packaging of tobacco products:</p>
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<h2>Joining the Olive Revolution</h2>
<p>In the wake of today’s High Court ruling, the big question is who will be next to join the Olive Revolution and adopt plain packaging of tobacco products. <a href="http://www.sbs.com.au/news/article/1682812/Court-win-on-tobacco-a-watershed-Roxon">Nicola Roxon</a> commented, “Australia’s actions are being closely watched by governments around the world. The message to the rest of the world is big tobacco can be taken on and beaten.”</p>
<p>The United Kingdom has held <a href="http://consultations.dh.gov.uk/tobacco/standardised-packaging-of-tobacco-products/consult_view">a public consultation</a> on the plain packaging of tobacco products, and <a href="http://phrc.lshtm.ac.uk/project_2011-2016_006.html">commissioned research on the topic</a>. New Zealand has also engaged in a consultation on the <a href="http://www.health.govt.nz/publication/proposal-introduce-plain-packaging-tobacco-products-new-zealand">plain packaging of tobacco products</a>.</p>
<p>The great Norwegian leader Gro Harlem Brundtland helped transform WHO and focus its mandate on tobacco control. Norway has prohibited its Pension Fund from investing in tobacco (showing the way for <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=fapa_ctte/ethical_invest_2012/index.htm">Australia’s Future Fund</a>) and supported Australia’s plain packaging regime in the <a href="http://www.guardian.co.uk/business/2012/aug/15/tobacco-plain-packaging-australia-court">World Trade Organization (WTO)</a>. It looks keen to follow Australia’s lead.</p>
<p>Meanwhile, Australian and Indian public health experts have presented a report to the New Delhi Parliament urging <a href="http://www.smh.com.au/opinion/political-news/india-may-adopt-australias-plain-packaging-laws-20120804-23mm4.html">India, the world’s second-largest tobacco consumer and producer, to act</a>. And Roxon has also been <a href="http://www.smh.com.au/opinion/political-news/washington-honours-roxon-global-champion-in-antitobacco-battle-20120516-1yr73.html">promoting plain packaging of tobacco products to the United States Congress and the Obama Administration</a>.</p>
<p>The High Court ruling will embolden countries – such as the United Kingdom, New Zealand, Norway, India and the United States – contemplating plain packaging of tobacco countries. The decision will strengthen the case of the Australia in its international disputes over <a href="http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm">the plain packaging regime in the World Trade Organization</a> and under the <a href="https://theconversation.com/big-tobacco-v-australia-taking-the-battle-to-the-global-stage-2027">Hong Kong-Australia Investment Treaty</a>. </p>
<p>The decision reinforces the wisdom of the Australian Government in <a href="https://theconversation.com/a-dangerous-investment-australia-new-zealand-and-the-trans-pacific-partnership-7440">excluding state-investor clauses from future trade agreements</a>. But it’s also important that plain packaging and other measures of tobacco control are embraced by the United States and others - especially during negotiations over the <a href="https://theconversation.com/a-mercurial-treaty-the-trans-pacific-partnership-and-the-united-states-7471">Trans-Pacific Partnership</a>.
<br>
<em>Read other articles on plain packaging published since the High Court decision:</em></p>
<ul>
<li><p>On what this decision means for tobacco companies - <a href="https://theconversation.com/big-tobacco-crashes-at-first-legal-hurdle-on-plain-packaging-8807">Big Tobacco crashes at first legal hurdle on plain packaging</a></p></li>
<li><p>On the next battle for Australia under the dispute settlement provisions in the Australia-Hong Kong bilateral investment treaty - <a href="https://theconversation.com/government-wins-first-battle-in-plain-packaging-war-8855">Government wins first battle in plain packaging war</a></p></li>
<li><p>On why Philip Morris is using the Australia-Hong Kong BIT to try to stop plain packaging - <a href="https://theconversation.com/why-bilateral-investment-treaties-are-the-last-refuge-of-big-tobacco-8880">Why bilateral investment treaties are the last refuge of Big Tobacco</a></p></li>
</ul><img src="https://counter.theconversation.com/content/8856/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Rimmer is an academic at the Australian National University, and abides by its policy on the responsible practice of research: <a href="http://policies.anu.edu.au/policies/responsible_practice_of_research/policy">http://policies.anu.edu.au/policies/responsible_practice_of_research/policy</a> Matthew Rimmer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. Indeed, the Australian National University strictly forbids its staff from receiving direct funding from the tobacco industry: 'Direct funding from foundations primarily funded by the tobacco industry will not be accepted. Direct funding from business units of companies involved in the tobacco industry will not be accepted if, in the opinion of the Deputy Vice-Chancellor Research, the unit is engaged directly in the production, manufacture, distribution, promotion or marketing of tobacco or tobacco products as its primary business; or acceptance of the funding involves any promotion or advertising that can be construed to support the tobacco industry or the tobacco lobby and its activities.' <a href="http://policies.anu.edu.au/policies/externally_funded_grants_consultancies_and_contracts/policy">http://policies.anu.edu.au/policies/externally_funded_grants_consultancies_and_contracts/policy</a> Matthew Rimmer receives funding from the Australian Research Council for unrelated work on intellectual property and climate change.</span></em></p>After much political debate, the Australian Parliament passed the Tobacco Plain Packaging Act 2011 (Cth). Australian legislators, such as Richard di Natale, provided moving accounts for the need for plain…Matthew Rimmer, ARC Future Fellow and Associate Professor in Intellectual Property, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/88072012-08-15T00:23:29Z2012-08-15T00:23:29ZBig Tobacco crashes at first legal hurdle on plain packaging<figure><img src="https://images.theconversation.com/files/14234/original/tfd2crwd-1344920305.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia’s High Court has dismissed the plain tobacco packaging case brought against the government by tobacco companies.</span> <span class="attribution"><span class="source">TRACEY NEARMY/AAP</span></span></figcaption></figure><p>This morning Australia’s High Court dismissed the plain tobacco packaging <a href="http://www.austlii.edu.au/au/other/HCATrans/2012/91.html">case</a> brought against the Australian government by the world’s largest tobacco companies. The companies had challenged the government’s <a href="https://theconversation.com/world-first-plain-packaging-for-tobacco-products-a-step-closer-to-becoming-law-3053">new law</a> – due to be fully implemented from December 1 this year.</p>
<p>Reasons for the decision will be published soon. But it is thought that the Court may have released its decision in advance of the detailed reasons because this Friday, British American Tobacco Australasia is due in another court on a related matter. That involves the company’s efforts to obtain documents dating back to the Keating government (1991-1996) under freedom of information laws. The High Court may have considered that the company’s interest in these documents might now be judged a fool’s errand and are giving it a chance to reconsider.</p>
<h2>Fighting on</h2>
<p>Like the mortally wounded <a href="http://www.youtube.com/watch?v=dhRUe-gz690">Black Knight</a> fighting on in Monty Python and the Holy Grail, Big Tobacco will now be hoping that, despite losing its right arm and buckets of blood (just flesh wounds), two other cases will see off the scourge of plain packs against all the odds.</p>
<p>Three governments, <a href="http://www.dfat.gov.au/geo/fs/ukra.pdf">Ukraine</a>, the <a href="http://www.dfat.gov.au/geo/fs/domi.pdf">Dominican Republic</a> and <a href="http://www.dfat.gov.au/geo/fs/hond.pdf">Honduras</a> have filed complaints with the <a href="http://www.wto.org/">World Trade Organization</a> against the Australian government’s law. None of these nations have any significant trade of any sort with Australia, let alone in tobacco products. </p>
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<p>For all Big Tobacco’s bluster and its success in whistling up sternly worded submissions from a variety of US-based trade associations, it is telling that these three puppets are the heaviest hitters it could convince to run its case with the WTO. China, the United States and Indonesia are all big tobacco manufacturers with major strategic ties to Australia. </p>
<p>But Indonesia and the United States are two countries conspicuous among basket-case nations (such as Somalia, Zimbabwe and Malawi) absent from the <a href="http://www.who.int/fctc/signatories_parties/en/index.html">175 countries</a> that are party to the <a href="http://www.who.int/fctc/en/">WHO Framework Convention on Tobacco Control</a>. They might have been expected to complain about the precedent that Australia has set. But instead, Big Tobacco’s best team are global minnows. <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1874593">Specialists</a> in global trade law give the challenges little prospect of success.</p>
<p>A third case is being brought by Philip Morris Asia (based in Hong Kong) via a <a href="http://theconversation.com/big-tobacco-vs-australia-philip-morris-scores-an-own-goal-4967">bilateral trade agreement</a> between Australia and Hong Kong signed in 1993. The timeline of this case is fascinating. </p>
<p>On April 29, 2010, the Australian government announced its intention to introduce plain packaging. At the time Philip Morris tobacco products in Australia were manufactured by Philip Morris Australia. On 23 February 2011, Philip Morris Asia purchased Philip Morris Australia and on 27 June, 2011 – a full 14 months after knowing the government intended to introduce plain packs – Philip Morris Asia served its notice of claim to the Australian government.</p>
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<p>Imagine someone considering purchasing a property and learning 14 months before the sale that the property would be badly affected by a new freeway being built nearby. Then imagine them going ahead and purchasing the property and then taking the government to court for compensation over damage to their investment. Philip Morris Asia’s case would seem to have the same prospects, quite apart from all the arguments against the idea that a trade treaty should be able to override any government’s sovereignty in public health matters.</p>
<h2>What to expect</h2>
<p>So what can we expect locally from Big Tobacco? First, we will see dramatic price falls in the retail price of tobacco. Many will think “these [famous name brand] cigarettes are costing me $3 to $4 a pack more than cheap unknown brands in exactly the same packaging except for the small brand name. They taste pretty much the same as cheap brands, so why should I pay out all the extra?” </p>
<p>Tobacco companies today chase the “value market” because they know that total sales volume is steady and the margins on high-end brands is where they profit most. A leaked BATA internal staff development DVD from 2001 explains how the company then needed to sell five packs of budget brands to get the same profit from one premium brand pack. Plain packaging strips the industry of this vital source of revenue while gutting its ability to distract smokers from thinking about what they are buying.</p>
<p>Australia is a tiny market for Big Tobacco, and it may well be willing to treat us in the way as when supermarkets place drastically reduced “loss leader” items on special to get customers into the store. The industry will be so desperate to demonstrate to watching nations that plain packs “don’t work” that it might even be prepared to wear local losses for a year or so.</p>
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<p>But the Australian government can simply raise tobacco tax overnight as often as it needs to effectively maintain a floor price for cigarettes that will deter smokers from buying more than they could have afforded previously.</p>
<p>Second, stand by for lots of “independent” reports by tame academics from obscure universities or corporate consultancies, purporting to demonstrate that the new packaging has not affected smoking. The rhetoric will oxygenate ignorant community assumptions that plain packaging was somehow going to dramatically cut smoking across the community overnight. The reality of the historical fall in smoking over the last 40 years is that annual declines have been fractions of 1%, driven by the combined effects of all policies and programs. </p>
<p>Plain packaging may amplify this downward trend, but no one expects it to dramatically increase it among adults who consume <a href="http://www.tobaccoinaustralia.org.au/chapter-13-taxation/13-6-revenue-from-tobacco-taxes-in-australia">98.2%</a> of all tobacco sold. The main goal of plain packaging has always been to deglamourise smoking <a href="http://www.youtube.com/watch?v=c_z-4S8iicc">among children</a>. </p>
<p>The last significant vestiges of local tobacco advertising ended in 1992. So anyone aged 20 today, has grown up never exposed to domestic tobacco advertising. Today’s smoking rates by youth are the lowest ever recorded. Plain packaging is designed to turbo-charge that decline and make smoking history for future generations. Quick and dirty Big Tobacco surveys months after its introduction will never capture that effect.</p>
<p><em>Read other articles on plain packaging published since the High Court decision:</em></p>
<ul>
<li><p>On what this means for other countries wanting to introduce plain packaging and the WHO - <a href="https://theconversation.com/the-olive-revolution-australias-plain-packaging-leads-the-world-8856">The Olive Revolution: Australia’s plain packaging leads the world</a></p></li>
<li><p>On the next battle for Australia under the dispute settlement provisions in the Australia-Hong Kong bilateral investment treaty - <a href="https://theconversation.com/government-wins-first-battle-in-plain-packaging-war-8855">Government wins first battle in plain packaging war</a></p></li>
<li><p>On why Philip Morris is using the Australia-Hong Kong BIT to try to stop plain packaging - <a href="https://theconversation.com/why-bilateral-investment-treaties-are-the-last-refuge-of-big-tobacco-8880">Why bilateral investment treaties are the last refuge of Big Tobacco</a></p></li>
</ul><img src="https://counter.theconversation.com/content/8807/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Chapman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>This morning Australia’s High Court dismissed the plain tobacco packaging case brought against the Australian government by the world’s largest tobacco companies. The companies had challenged the government’s…Simon Chapman, Professor of Public Health, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/49672012-01-19T23:26:33Z2012-01-19T23:26:33ZBig Tobacco vs Australia: Philip Morris scores an own goal<figure><img src="https://images.theconversation.com/files/7012/original/wgr3zhwb-1326864588.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It appears as though Philip Morris Asia only acquired the Australian companies in order to be able to launch this claim under the Hong Kong BIT.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>You may have missed it, but the stoush between Big Tobacco and the Australian government over the plain packaging legislation took an odd turn late last year. The government’s response to Philip Morris Asia’s attempt to challenge the legislation under the bilateral investment treaty with Hong Kong revealed that Philip Morris may have acquired its Australian investments purely for the purpose of taking the action. </p>
<p>Just before Christmas, the Australian Government formally responded to the claims of Philip Morris Asia Ltd (PMA), a Hong Kong company, that the legislation for plain packaging of cigarettes breaches the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (the “BIT”). </p>
<p>Briefly, PMA owns all the shares in Philip Morris (Australia) Ltd, which, in turn, owns all the shares in Philip Morris Ltd. Philip Morris Ltd owns or has a licence to use some tobacco trade marks that are certainly worth a lot of money. PMA’s argument is that the plain packaging legislation constitutes an expropriation or deprivation of its investments in the two Australian companies because of its detrimental impact on the value of those trademarks. </p>
<p>Much has <a href="https://theconversation.com/big-tobacco-v-australia-taking-the-battle-to-the-global-stage-2027">already been written</a> on whether the legislation could constitute a breach of the BIT, even if everything that PMA claims about the facts of the matter are correct. PMA will struggle to show that there has been any expropriation within the meaning of the BIT. </p>
<p>But, even more significantly, PMA did not state in its documentation one further key fact that seriously affects the strength of its argument. </p>
<p>The Australian government’s formal response to PMA makes the point that PMA did not have any interest in the Australian companies until February 23, 2011. The Australian government had made its policy position very clear and public well before that date, in April 2010. In addition, it received submissions from Philip Morris about the proposed legislation well before that date, so none of the Philip Morris companies can seriously claim that they were not aware of the impending action by the Australian Government. </p>
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<p>It appears as though PMA only acquired the Australian companies in order to be able to launch this claim under the BIT. It also seems that PMA acquired assets in Australia knowing that they would be adversely affected by the forthcoming legislation. </p>
<p>The company’s own documentation in the dispute alleges that it is entitled to compensation “in an amount to be quantified but of the order of billions of Australian dollars”. So PMA acquired assets knowing that, according to it, the value of those assets was about to be reduced by “billions of Australian dollars”.</p>
<p>Article 6 of the BIT specifically refers to how compensation should be calculated. It states that the compensation shall amount to “the real value of the investment immediately before the deprivation or before the impending deprivation became public knowledge whichever is the earlier”. </p>
<p>The investment is defined in Article 1 of the BIT as the investment of the Hong Kong investors, that is, PMA. So what was the value of the “investment” that PMA had before the impending “deprivation” became public knowledge? It seems that it did not have any investment at all at the time that the impending “deprivation” became public knowledge. </p>
<p>No doubt PMA will have some argument on the point but, as a general rule, the value of nothing is nothing. </p>
<p>It appears that PMA’s claim for “billions of Australian dollars” has about as much life as the parrot in the famous Monty Python sketch. It will be interesting to see whether PMA argues that its claim is just resting or, perhaps, just temporarily stunned by the Australian government taking it out of its cage and giving it a good hard whack with the facts. </p><img src="https://counter.theconversation.com/content/4967/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Davison is a member of the Expert Advisory Group on Tobacco Plain Packaging. </span></em></p>You may have missed it, but the stoush between Big Tobacco and the Australian government over the plain packaging legislation took an odd turn late last year. The government’s response to Philip Morris…Mark Davison, Professor of Law , Monash UniversityLicensed as Creative Commons – attribution, no derivatives.