If, like us, you have been annoyed recently by the TV ads
depicting a gap-toothed nanny warning against the Federal
Government's proposed plain packaging legislation, you might be
amused by the announcement yesterday that Big Tobacco, in the form
of Philip Morris, would be suing the Government of Australia
seeking billions of dollars in compensation.
Is there anything incongruous about a multinational urging us to
stand with it against the government while at the same time asking
us to compensate it as it will now find it a bit harder to sell its
The back story is that the plain packaging legislation recently
received opposition support. So the hearts and minds campaign is
lost and the scare campaign has begun. Philip Morris has said that
it will commence arbitration in Singapore against the Australian
government for breach of a Hong Kong/Australia investment treaty.
This is the first time that an investment treaty claim has been
brought against Australia. Under international law investors can
sue governments for breaches of promises made under investment
treaties. Such promises include the right to compensation where the
investor's property has been compulsorily acquired. Apparently
Philip Morris is a Hong Kong company. By funnelling its investments
in Australia through the Hong Kong company Philip Morris is able to
take advantage of the treaty protections. Something that
doesn't appear to be available to the other members of Big
In a similar action against Uruguay last year Philip Morris
sought both compensation and "suspension", meaning an
order from the arbitral tribunal that the legislation not be
implemented. That case is yet to be decided.
Under the terms of the treaty Philip Morris has demanded that
the government enter a mandatory 90 day negotiation phase before
proceedings properly commence. After that we will see how serious
the claim is and what Philip Morris really wants.
When Australia was negotiating its investment treaty with Hong
Kong, did the government contemplate that it might be used as a
weapon to try to overturn legislation designed to protect public
health in Australia? No. But that's what's happening now.
This case will be well worth watching.
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