In 2012, tobacco giant Philip Morris launched legal action against Australia’s plain packaging cigarette laws, seeking financial compensation for lost sales and profits under an investor-state dispute settlement (ISDS) clause contained in an obscure investment agreement with Hong Kong.
Here’s the Productivity Commission’s explanation of this action via its Trade and Assistance Review:
[Philip Morris Asia] is asking an arbitration panel to suspend the law and award substantial compensation for the financial damage that plain packaging will cause by commoditizing the cigarette market in Australia. (PMI 2014)…
…the ongoing costs to Australian taxpayers of funding the preparation and defence of the tobacco plain packaging legislation are likely to be substantial. Since the dispute was lodged, there have been eleven procedural orders determined by the PCA requiring legal representation by both parties.
…[There is] a lack of transparency regarding the true cost of including ISDS provisions in Australia’s trade agreements and investment treaties. The open-ended nature of these costs needs to be taken into account in any discussion regarding the appropriateness of such provisions and consideration of the net benefits (costs) that they entail.
Last year, it was revealed that Australian taxpayers were expected to spend more than $50 million defending the law suit, a figure that could have risen if Australia lost its first defence.
Thankfully, The ABC has reported today that Philip Morris has lost its law suit against Australia:
An international tribunal has unveiled a secret ruling confirming it rejected a bid by tobacco giant Philip Morris to sue Australia over its plain packaging laws, calling the attempt “an abuse of rights”.
In its heavily redacted 186-page ruling dating from December 17, 2015, the Permanent Court of Arbitration (PCA) said it had no jurisdiction over the case brought by Philip Morris…
So we can all breathe a sigh of relief that the case has been ‘thrown out’.
That said, give the recently concluded Trans-Pacific Partnership (TPP) trade deal also includes an ISDS clause, and the litigiousness of US corporations, how long will it be before Australian taxpayers are called upon to defend further frivolous law suits?
