1. It’s all about presentation: lessons from the tobacco packaging cases
Philip Morris v Australia
Philip Morris v Uruguay
Simon Foote, Bankside Chambers, Auckland

2. The decisions Philip Morris v Australia
Decision on jurisdiction – December 2015
Plain packaging
Philip Morris v Uruguay
Decision on the merits – July 2016
80/80 graphic health warnings (GHW)
Single presentation requirement (SPR)

4. PM v Australia: pat on the back; punch in the face
John Oliver: Last Week Tonight
PM restructure – PM Asia (HK) takes ownership of Australian assets
The Hong Kong – Australia BIT 1993
Expropriation
Fair and equitable treatment
No carve out for public welfare regulation
NZ-HK Treaty 1995

5. PM v Australia: timing is everything
Chronology:
April 2010 – plain packaging policy announcement by Rudd Government
June 2010 – Gillard ousts Rudd
August 2010 – election results in minority Labour Government
February 2011 – PM restructure
April 2011 – draft legislation released for consultation
May 2011 – opposition advise they will support legislation
June – November 2011 – legislative process
Nov – Dec 2011 – legislation passed and Royal assent

6. Admission of investment
FIRB application – no mention of potential BIT claim
Application asked for a reason for investment, but Tribunal found not mandatory to declare potential investment treaty coverage
PM’s position on PP well known – FIRB to blame for missing the treaty implications of PM’s restructure
Lesson: application process should ask directly about treaty implications; overseas investment officials need to be well informed about treaty network

7. Abuse of right
Early treaty cases focused on birth of dispute – actionable breach of treaty
PM argued that until at least opposition backed legislation, then plain packaging was an uncertain prospect
PM v Australia confirmed emerging broader rule that abuse exists once specific dispute becomes foreseeable
Once policy announced, uncertainty about survival of government not sufficient to make dispute unforeseeable
If it were otherwise, “would create particular difficulty for States whose electoral processes can result in minority governments” – useful for NZ situation

8. Merits of plain packaging not addressed
PM case not without merit on face
Expropriation requires compensation for taking of property
Australian constitutional case – was this an “acquisition of property on just terms”?
High Court found:
Trade marks are property
Plain packaging was taking/elimination of commercial utility of trade marks
Not an acquisition under Constitution – no reciprocal benefit
BUT, possibly an indirect expropriation under a BIT

9. PM v Uruguay Uruguay leader in anti-Tobacco measures
SPR and 80/80 above and beyond WHO FCTC
Switzerland – Uruguay BIT
Expropriation
FET
No public regulation carve-out
Same as HK-Australia BIT

10. Loss of use of trade marks not expropriation
Not substantial deprivation of value
Loss of IP rights seen in context of whole operation; individual TMs not an investment in and of themselves
Partial loss of profits not enough – PMU remained profitable, just not as profitable
Arguably contradicts Kriebaum theory

11. Doctrine of police powers inherent in investment treaties
Absence of express carve out for public welfare regulation irrelevant
Compensation for expropriation not payable where economic injury results from bona fide non- discriminatory regulation w/in police powers of states
Police powers include maintenance of public order, health or morality
Controversial result: re-writing of treaty?
Modern treaties express about public welfare regulation

12. Fair and equitable treatment: the standard
No reference to standard in Swiss-Uruguay treaty: what is unfair or unreasonable?
Standard is simple reasonableness – outrageous/unconscionable conduct by State not required
FET has moved on from 1920s customary law standard
Still leaves open question regarding treaties that refer to “customary” or “minimum” international law standard

13. The benefit of the doubt
Wide margin of appreciation/high degree of deference to State policy choices
Majority held that a bona fide regulation aimed at a real problem cannot be second guessed
Gary Born says bona fide regulation raises a presumption, but must still be an objective inquiry as to whether a regulation logically relates to its goal/purpose
Born finds SPR is arbitrary
Not in FCTC
No evidence of effectiveness in literature
No government consultation
Does not add to existing law excluding misrepresentations
Does not prevent misleading packaging/allows misleading packaging

14. Conclusion Tobacco decisions very much in favour of State
Regulation must be entirely misguided/illogical to be a breach of FET even on lower standard of reasonableness
PM would likely have lost on the merits in Australian case
NZ covered by public welfare carve out in HK treaty
Still gaps/issues that can be ironed out by good treaty drafting – substantial deprivation/public regulation/FET standard/exclusion of tobacco claims
Uruguay awarded costs of USD 7 million