Philip Morris Resorts HK-Australia Investment Treaty in Cigarette Labelling Case

· Demands $4.16bn Compensation

· Tobacco Major Loses Case

An investor-state investment dispute tribunal has published an edited version of its decision in the high-profile case between Australia and the Asian subsidiary of Philip Morris, the tobacco giant, concerning the ramifications of Canberra’s plain packaging laws on the company’s Australian investments.

While the tribunal’s decision was made last December, it was only made public this month.

Under Australian law, tobacco goods cannot use logos, brand imagery, or promotional text, and must be sold in packaging that is uniform in size, colour, and format, among other rules.

In the dispute, Philip Morris (PM) Asia claimed that the policy went against the 1993 Australia-Hong Kong Bilateral Investment Treaty (BIT), unlawfully expropriating the company’s investment by effectively “banning” its trademarks and failing to provide that investment with fair and equitable treatment, full protection, and security.

PM Asia also asked the tribunal to order Australia not to apply the plain packaging policy to its company’s cigarettes, and argued in favour of at least US$4.16 billion in compensation.

In the decision published last week, the tribunal deemed that PM Asia was “abusing” the investor-state arbitration process in the plain packaging case, and therefore rejected the company’s claims and declined to exercise jurisdiction over the dispute.

In recent years, however, tobacco sales in the country have fallen to their lowest ever, with some health surveys showing a drop in smoking rates for key age demographics.