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Professor Tania Voon
Australia was the first country in the world to mandate plain tobacco packaging and, despite ongoing litigation, the tobacco industry’s fears are being realised as others follow suit
Australia’s starkly ‘plain’ tobacco packages are now a familiar sight. Since December 2012, all tobacco products sold in Australia have been sold in plain packaging – free of promotional colours and logos, but with large and confronting health warnings.
The explicit objectives of the legislation are to ‘improve public health’ and to give effect to Australia’s obligations as a party to the WHO Framework Convention on Tobacco Control (FCTC).
Although the Australian scheme is intended to have a significant effect over decades, early evidence suggests that it has already been effective in reducing the appeal of smoking.
Australia as a Tobacco Industry target
Unsurprisingly, the tobacco industry has responded aggressively, bringing and supporting a range of local and international legal actions, the latest of which continue at the World Trade Organization (WTO).
But with a population of only 25 million and a smoking rate that has halved since 1995 to just 13 per cent, Australia’s market was never Big Tobacco’s real target. Leaked industry documents confirm that, by launching multiple claims, the industry aimed to hinder the implementation of the Australian laws and discourage other countries from adopting similar laws.
The industry’s objections to plain packaging date back to before Australia announced its intention to pursue plain packaging in 2010, creating many years of expensive litigation.
The constitutional claim: no unjust acquisition of property
The legal fights began in the High Court of Australia – Australia’s highest court – where several tobacco companies unsuccessfully argued that tobacco plain packaging constituted an ‘acquisition of property’, requiring compensation under section 51(xxxi) of the Australian Constitution.
In 2012, the Court held for Australia by a 6:1 majority, ordering the plaintiffs to pay Australia’s costs.
The investment claim: abuse of rights
Three years later, in 2015, an international arbitral tribunal declined jurisdiction to hear claims brought by Philip Morris Asia Ltd against Australia under the bilateral investment treaty between Hong Kong and Australia. That tribunal, too, ordered the claimant to pay part of Australia’s costs.
The tribunal described the arbitration as an ‘abuse of rights’ because tobacco giant Philip Morris had acquired Australian subsidiaries for the “principal, if not sole, purpose” of bringing this claim against Australia.
Philip Morris characterised the decision as “hinge[ing] entirely on a procedural issue”, saying that it did not “validat[e] plain packaging in Australia or anywhere else”. The industry’s clear message was that other governments shouldn’t take comfort in Australia’s victory.
We can’t know for sure what the tribunal would have decided had the case proceeded to the merits stage, but, despite Philip Morris’ warnings, Australia probably would have won.