Philip Morris Asia Limited (Hong Kong) v. The Commonwealth of Australia: Permanent Court of Arbitration Tribunal Publishes Redacted Version of Award on Jurisdiction and Admissibility - Steven nelson and michael robbins
The Permanent Court of Arbitration (“PCA”) has just released the full award of the Tribunal in Philip Morris Asia Limited (Hong Kong) v. The Commonwealth of Australia, which was rendered in late 2015. We previously published here an eUpdate on the dispute and the outcome of the proceedings, in which Philip Morris had challenged Australian legislation that required tobacco companies marketing cigarettes in Australia to sell them only in logo-free, drab dark brown packaging (the “Plain Packaging Measures”). The full award now makes available to us the grounds on which the Tribunal declined to exercise jurisdiction in the matter.
The claim was brought by Philip Morris Asia Limited (Hong Kong) (“Philip Morris HK”) under the provisions of Australia’s 1993 Investment Promotion and Protection Agreement with Hong Kong (the “Treaty”), which is a bilateral investment treaty or “BIT”. Philip Morris HK asserted that the Plain Packaging Measures “bar the use of intellectual property on tobacco products and packaging, transforming [the Claimant’s subsidiary in Australia] from a manufacturer of branded products to a manufacturer of commoditized products with the consequential effect of substantially diminishing the value of [the Claimant’s] investments in Australia”, for which it sought declaratory relief and compensation. Its commencement of arbitration under the Treaty followed on the heels of the 2012 dismissal by the Australian High Court of a challenge to the law by Philip Morris and other major tobacco companies, including British American Tobacco, Imperial Tobacco and Japan Tobacco.
In its award, the Tribunal held that Philip Morris’s attempt to challenge Australia’s plain packaging laws was an abuse of rights. It determined that Philip Morris’s claims were inadmissible and that it was thus precluded from exercising jurisdiction over the dispute.
Background to the Dispute
On 29 April 2010, Australia’s Prime Minister Kevin Rudd and Health Minister Roxon unequivocally announced the Government’s intention to introduce the Plain Packaging Measures.
On 23 February 2011, Philip Morris HK formally acquired shares in Philip Morris (Australia) Limited (“PM Australia”) in an internal corporate reorganization. This restructuring gave Philip Morris HK prima facie standing to bring its claim under the investor-state dispute settlement provisions of the