Smoked! Philip Morris' plain packaging complaint rejected by Australian court

Photo illustration of new mandatory packaging for cigarettes sold in Australia. © Tim Wimborne
Australia has won a legal battle against Philip Morris, allowing the country to continue banning tobacco companies from displaying their logos and colors on cigarette packs. The packaging will also continue to display graphic health warnings.

The Permanent Court of Arbitration refused a challenge by Philip Morris on Friday, which argued that the ban on trademarks breached foreign investment provisions of Australia's 1993 Investment Promotion and Protection Agreement with Hong Kong.

Friday’s decision was praised by Fiona Nash, the Australian minister responsible for tobacco policy.

“We welcome the unanimous decision by the tribunal agreeing with Australia’s position that it has no jurisdiction to hear Philip Morris’s claim,” she said in a statement.

The Public Health Association of Australia also welcomed the decision, calling it the “best Christmas present for public health nationally and internationally.”

“Now the tobacco companies have lost another crucial legal bid to stop this life-saving measure. The message is loud and clear – plain packaging works, and it is here to stay,” the association said.

But Philip Morris said just the opposite, stressing that it would review the court's decision.

“There is nothing in today’s outcome that addresses, let alone validates, plain packaging in Australia or anywhere else,” senior vice president and general counsel Marc Firestone said.

“The outcome hinged entirely on a procedural issue that Australia chose to advocate instead of confronting head on the merits of whether plain packaging is legal or even works,” he added.

The company's complaint was filed in 2011, the same year that the plain packaging legislation was introduced by Julia Gillard's Labour government. The laws went into effect in 2012.

In addition to banning tobacco companies' logos and colors, the legislation allows for graphic images of lung cancer and other tobacco-induced health problems to be displayed on every pack of cigarettes. The pictures are accompanied by slogans such as “smoking causes mouth and throat cancer” and “smoking causes blindness.”

The Friday decision is not the first time that a tobacco company has filed a complaint against Australia's plain packaging laws. A high court rejected a domestic challenge by major tobacco companies in 2012.

Meanwhile, the World Trade Organization (WTO) is considering a separate challenge to Australia's legislation brought about by Ukraine, Honduras, Indonesia, the Dominican Republic, and Cuba, with the member states arguing that the measure breaches Australia's international obligations. A decision is expected in the second half of 2016.