Despite a win in the High Court the Australian Government’s plain packaging legislation could still face challenges from tobacco companies at the international level through investor-state disputes.

RegNet's Dr Kyla Tienhaara said that while the government had done a lot to protect itself from investor-state disputes, there were still no guarantees it would win cases at an international level.

“The government and health advocates are deservedly celebrating the High Court decision on plain packaging. But, tobacco companies like Philip Morris have indicated they believe the decision will have no bearing on the cases pending in the World Trade Organization (WTO) or on challenges under the Hong Kong-Australia bilateral trade agreement,” she said.

“While this statement underestimates the extent of deference by domestic courts to international tribunals, it is true that the High Court decision doesn’t preclude cases of investor-state disputes at the international level proceeding or guarantee the government will prevail in them.

“The investor-state dispute under the Hong Kong treaty is particularly concerning for supporters of the legislation. Unlike the WTO, there’s no exception under the treaty for public health measures. And unlike in the Australian Constitution, ‘expropriation’ (the act of a government taking private property) is defined very broadly.

“If a government measure has a significant impact on an investment (such as a negative effect on the investor’s profits), a tribunal may decide in favour of that investor. This difference between domestic and international law clearly demonstrates how foreign investors are currently provided greater rights under international investment treaties than domestic firms are accorded under Australian law.”

Dr Tienhaara added that Philip Morris’ plans to proceed with its investor-state dispute despite yesterday’s ruling highlighted how the investment arbitration system has been distorted by corporate interests since its inception in the 1960s.  

“Originally, the system was meant to provide protection for investors operating in countries where the rule of law was absent or where court systems were considered corrupt or biased against foreigners. Now, disgruntled corporations such as Philip Morris, who’ve had their day in court and have been treated fairly in a transparent and accountable manner, are utilising the arbitration system as a supranational court of appeal.

“The government has very strong arguments on its side but outcomes in investment arbitration are notoriously hard to predict. There’s no system of basing decisions on precedents and case law is both recent and inconsistent,” she said.