Australia delivered third resounding legal victory in plain packaging laws

Friday 29 June, 2018
by Jonathan Liberman
Image: Plain packaging examples (Picture: Alan Pryke / Source: The Australian)

Australia has been delivered its third resounding legal victory in the defence of its tobacco plain packaging laws with release of the World Trade Organization (WTO) Panel Report overnight (Thursday, 28 June in Geneva). The Panel Report finds in favour of Australia, dismissing claims brought by Cuba, Dominican Republic, Honduras and Indonesia.

Australia’s plain packaging laws were announced in April 2010, enacted in November 2011, and have been in operation since December 2012.

The laws were introduced in the face of the tobacco industry’s insistence that they would breach both Australia’s constitution and its international legal obligations. The tobacco industry went further, claiming that the Australian Government would be forced to pay the industry billions of dollars in compensation. To the surprise of few, these claims have proved unfounded.

In August 2012, a constitutional challenge brought in Australia’s High Court by four major tobacco multinationals was dismissed. The court found by a 6-1 majority that the laws restricted the tobacco companies’ use of their intellectual property, but did not acquire their property. The Australian Government was able to impose such restrictions on the tobacco companies in the interest of public health – without having to compensate the companies.

In December 2015, an investment treaty challenge by Philip Morris Asia was dismissed. This claim was thrown out on the ground that the company had engaged in an ‘abuse of rights’. The company had restructured in order to bring a claim under a 1993 investment treaty between Australia and Hong Kong.

While the case did not get to a consideration of the substance of the company’s claims, it can be assumed the outcome would have been the same result as in Uruguay’s successful defence of its tobacco packaging laws against an investment treaty claim by Philip Morris Switzerland. The tribunal found that Uruguay was fully within its powers to regulate to protect public health, supported by a global treaty, the World Health Organization’s Framework Convention on Tobacco Control.

And finally, this brings us to today, Australia’s victory in the WTO. The Panel Report runs to 884 pages and we will provide our detailed analysis in due course. However, in essence, the WTO Panel dismissed the claims that Australia’s tobacco plain packaging laws unjustifiably infringe intellectual property protections and are unnecessarily trade restrictive. 

The WTO dispute settlement system is state-to-state, meaning the claims must be brought by countries, not industry. While the claims were brought by Cuba, Dominican Republic, Honduras and Indonesia, the tobacco industry’s support for the WTO challenges is on the public record.

The tobacco industry’s litigation strategy has been clear. Even where claims have little to no prospect of succeeding, litigation is usually lengthy – the WTO decision comes more than six and a half years after the legislation was enacted – and expensive to defend. Its threat can lead governments to delay or water down measures – or even decide against legislating.

Notwithstanding this strategy, six countries (France, Hungary, Ireland, New Zealand, Norway and the United Kingdom) have followed Australia’s lead and introduced plain packaging, and numerous others are progressing towards it.

While the legal side of Australia’s plain packaging challenges has taken much of the focus, we need to remember what is at the core of this long, drawn-out battle. And that is the health of people around the world. Plain packaging, along with other proven tobacco control measures, exists to protect the health of people from a product which kills over 7 million people worldwide each year.

It would be surprising if Australia’s victory in the WTO did not create a new global wave of implementation of tobacco plain packaging and other tobacco control measures – which, ultimately, will lead to better health outcomes for people globally.