Court of arbitration finds Philip Morris Asia case to be an abuse of rights and says it must pay Australias multi-million dollar legal costs
The tobacco manufacturer Philip Morris will be forced to pay millions of dollars in legal fees to Australia after its failed case against plain packaging laws.
Big tobacco companies have fought vigorously against the Gillard governments plain packaging laws since they were introduced in 2011.
By banning logos and distinctive-coloured cigarette packaging, Australias laws went further than the advertising bans and graphic health warnings introduced in many other countries.
Philip Morris, Imperial Tobacco and Japan Tobacco quickly attempted to have the laws overturned through a constitutional challenge in the high court, which they lost in 2012.
Philip Morris Asia then took a case to the permanent court of arbitration in 2012. It tried to use the conditions of a 1993 trade agreement between Australia and Hong Kong to argue a ban on trademarks breached foreign investment provisions.
The corporate giant not only lost but was criticised by the court, which found the case to be an abuse of rights.
The court published a decision on the payment of costs at the weekend, which it made in March. The decision, which brought five years of proceedings to a close, found Philip Morris Asia liable to pay Australias multimillion-dollar claim for legal costs.
The final costs figure was kept secret but Fairfax Media reported it as being up to $50m.
Australia successfully argued Philip Morris must pay its court fees and expenses, the cost of expert witnesses, travel, and solicitors and counsel. It also claimed interest. Australia had told the court its claim was modest and was a small proportion of what the tobacco giant had sought in damages.
It said Philip Morris had sought to challenge a public health measure of critical importance to Australia, making it important to mount a robust and comprehensive response to all aspects of the claim.
Philip Morris had tried to argue the governments costs were unreasonable for a legal team that consisted primarily of public servants.
The company argued that two similar countries, Canada and the US, had never claimed more than US$4.5m and US$3m respectively in costs and fees.
Australias claim was much more than that.
The claimant emphasizes that, even excluding the fees of four outside counsel, the respondents government lawyers claim over [redacted] in fees, even though Australia itself pays them very modest government salaries, the courts decision read.
But the court found Australias claim was reasonable, rejecting Philip Morriss arguments.
Taking into account the complexity of issues of domestic and international law relevant in this procedure, particularly for a government team usually not engaged in such disputes, the Tribunal does not consider that any of these costs claimed by the Respondent were unreasonable and should not have been incurred, it found.
In making this assessment, the Tribunal also takes into consideration the significant stakes involved in this dispute in respect of Australias economic, legal and political framework, and in particular the relevance of the outcome in respect of Australias policies in matters of public health.
Earlier this year big tobacco failed in a separate bid to have the laws overturned by the World Trade Organisation. The decision was widely seen as a green light for more countries to follow Australias lead.