QUT Law Review · QUT Law Review Volume 17 (2) – Special Issue: Plain Packaging of Tobacco...

Queensland University of Technology

QUT Law Review

Volume 17 Number 2 2017

Special Issue

Plain Packaging of Tobacco Products

Editorial

Plain Packaging Special Issue ─ Editorial

The Hon. Nicola Roxon

i

Articles – Special Issue on Plain Packaging of Tobacco Products

Tobacco Plain Packaging in Australia: JT International v Commonwealth and Beyond

Catherine Bond

1

Regulatory Chill: Learnings From New Zealand’s Plain Packaging Tobacco Law

Jane Kelsey

21

Property and Proportionality: Evaluating Ireland’s Tobacco Packaging Legislation

Eoin O’Dell

46

The Tobacco Industry’s Challenge to the United Kingdom’s Standardised Packaging

Legislation – Global Lessons for Tobacco Control Policy?

Jonathan Griffiths

66

Making the Case for Canada to Join the Tobacco Plain Packaging Revolution

Becky Freeman

83

Investor-State Dispute Settlement and Tobacco Control: Implications for Non-

Communicable Diseases Prevention and Consumption-Control Measures

Hope Johnson

102

The Global Tobacco Epidemic, the Plain Packaging of Tobacco Products, and the

World Trade Organization

Matthew Rimmer

131

Tobacco-Free Investment: Harnessing the Power of the Finance Industry in

Comprehensive Tobacco Control

Bronwyn King, Clare Payne and Emily Stone

161

QUT Law Review ISSN: Online- 2201-7275

Volume 17, Issue 2, pp i-iii DOI: 10.5204/qutlr.v17i2.697

This work is licensed under a Creative Commons Attribution 4.0 Licence. As an open access journal,

articles are free to use with proper attribution in educational and other non-commercial settings.

PLAIN PACKAGING SPECIAL ISSUE –

EDITORIAL

THE HON. NICOLA ROXON

It gives me great pleasure to write a forward on this topic at a time when there is such a

groundswell of international support for plain packaging of tobacco products. World No

Tobacco Day in 2016 had as its tag line ‘Get ready for plain packaging’ and the world’s health

ministers are doing just that.

When Australia became the first country in the world to remove all colours and logos on

tobacco packs in 2011 — recognising their allure to young new smokers — the tobacco

industry tried every move in their book to stop us. Lobbying, donations, advertising campaigns,

threats, dodgy research, front groups, overblown claims and legal action dominated our

political debate for two years. When all these local manoeuvres failed, the industry switched

its effort to trying to ensure we were the only country to take this step. Writing in November

2016, it is manifestly clear that those efforts, both local and international, have failed. Country

after country — France, the UK, Ireland, Canada, Norway, New Zealand — is either

implementing plain packaging, passing their laws, or consulting with the community before

introduction; and many more countries will move this way in the coming months and years.

Plain packaging of tobacco products is now truly an international movement. It is an epidemic

of the best sort, as countries catch on to its value, purpose and ease of implementation. We will

now see its introduction spread like wildfire around the world.

When we announced the introduction of plain packaging in Australia, it was a world first. The

government I was part of has received much praise for our resolve and foresight to see this

through, from smooth implementation to the great early results already showing significant

impact in the reduction of smoking rates across the country. I am proud of our action, but plain

packaging was not my idea originally — the idea initially came from a Canadian academic. In

fact, both Canada and Australia flirted with the idea in the 1990s, but were bullied and lied to

by a tobacco industry which convinced them that they would be in breach of their international

intellectual property obligations if they took such a step. Thankfully, academics, tobacco

control advocates and health professionals persisted and raised the idea again with us when we

sought advice on preventative health measures the government could implement. We now

know, through documents uncovered in other matters, that the industry always had clear advice

that there was no breach of such obligations. Nevertheless they went ahead arguing what they

knew to be false, and bought themselves a further decade or two free from this intervention.

This bad, misleading, untruthful behaviour from the industry is constantly repeating itself. Most

famously, of course, the industry misled the public and the US Congress about the known

harms of tobacco for decades. With the same tactics today in Canada, the industry is running

ads against the Trudeau government’s plans to introduce plain packs on the basis that ‘the

Australian experiment has failed’. They assert this in national media and paid advertising, in

flagrant disregard of all the credible research showing quite the opposite.

How does the tobacco industry keep getting away with it? Aren’t they embarrassed to lie?

Surely they won’t keep litigating when they so often lose? Actually, my belief is they truly

don’t care. Each tobacco control measure they can delay — long-term or short-term — works

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QUT Law Review Volume 17 (2) – Special Issue: Plain Packaging of Tobacco Products

QUT Law Review 17 (2), November 2017 | ii

for their business model selling an addictive product. Time means more people get hooked,

they have lifelong customers, and they make more money. The long, loyal tail of consumers

with such an addictive product is more profitable than most consumer items can ever boast at

their peak. So each country that hesitates to introduce tobacco control measures is actually

giving the tobacco industry time to find new customers. Each piece of litigation, even if lost,

can buy the tobacco industry marketers a few more years of breathing space. And even the

threat of litigation can have a chilling effect on governments — as we see with the WTO dispute

brought against Australia by several countries and as yet unresolved five years later! If any

country decided to ‘wait until the WTO dispute was complete’, the industry’s expenditure on

lawyers will have been worth its weight in gold to their business.

We need to stop expecting the tobacco industry to play by the rules that the rest of us abide by.

Unlike the tobacco industry, governments cannot and will not proceed by lying, and they won’t

start legal action just to obtain a delay; peer-reviewed researchers cannot and will not produce

dodgy research; charitable advocacy groups who raise money from the public for public good

are not going to campaign for pointless interventions, or argue with poor evidence.

Plain packaging is a successful intervention with strong, early outcomes. But you wouldn’t

know this if you only looked at the industry’s media, lobbying, advertisements, and their paid

research. This persistent industry strategy of misleading and misusing information is what

makes quality publications like this one so important. It can provide information, data, research

and analysis in a non-biased format for all to read and consume. What all tobacco control

advocates have learned, and this special edition contributes further to, is that those of us

wanting to rid the world of such a harmful and highly addictive product, need to be part of a

truly international movement. To successfully implement measures against powerful,

multinational tobacco interests we must constantly share expertise, warnings and research. We

need to know all the diversionary tactics and be ready for them. And we need to accept that the

tobacco industry has not for decades, and likely will not in the future, play by any of the rules

the rest of us adhere to — most obviously, telling the truth and acting on evidence.

This special issue allows advocates, governments and policy makers to learn from others, to

explore in some detail different national experiences, and deepen their knowledge of relevant

topics such as intellectual property, trade laws and the WTO, investor disputes and

constitutional challenges. Importantly, it encourages us to step outside our professional areas

of expertise to ensure we think about these measures holistically, encompassing health,

economics, trade, property, labour rights and so much more. This edition also comes at an

important time — at the start of a major trend. Just reflect on the fast expansion of graphic

health warnings, which have gone from their introduction by Canada as the first mover in 2001,

to now apply in 102 countries in just 15 years.1 Similarly, our example from Australia is

spreading fast as other countries adopt plain and standardised packaging. I believe this

intervention is now on an unstoppable trajectory and this edition will provide valuable insight

at a crucial time.

I also welcome the coverage in this edition of matters relatively new on the tobacco control

horizon, like the tobacco divestment movement. Tobacco free portfolios are new, but already

making a huge impact. This movement brings all the past work together into a single argument

1 For data on this, see the Canadian Cancer Society’s reports of October 2014 <http://www.cancer.ca/en/about-

us/for-media/media-releases/national/2014/international-warnings-report/?region=on>, and May 2016

<http://www.cancer.ca/~/media/cancer.ca/CW/for%20media/Media%20releases/2016/Plain%20packaging%20i

n%20France%20and%20UK/plain-packaging-overview---2016-05-19.pdf?la=en>.

Plain Packaging Special Issue – Editorial

QUT Law Review 17 (2), November 2017 | iii

questioning why anyone would invest in an undeniably dangerous product. It is a product that

has no use and no other utility or redeeming features. The industry manipulates and targets

young people — exemplified in tactics such as giving away MP3 players with packs of

cigarettes in East Timor, or creating pretty purple lipstick packs in Canada. As if this were not

enough, in many developing countries tobacco farmers are held in virtual servitude and child

labour is a regular feature. What is there to like about such an investment? Funds are

increasingly voting with their feet (and their dollars). This will be an interesting space to watch

and support as it, too, spreads its influence.

Because I am such a passionate advocate for tobacco control I am often asked if I ‘hate’ the

tobacco industry. I’m not a hater — I generally consider hate to be a harsh and useless emotion

— but I do find the industry relentlessly manipulative and untruthful, and irredeemably

pointless. Just consider:

They sell a hideously harmful product, that is highly addictive and with no other social

utility;

They have had clear evidence of harm caused by tobacco that they persistently denied and

hid for decades;

Despite being exposed in one country, they continue to pedal lies in other countries;

They deny targeting young people, yet produce pink and purple lipstick packs;

They use their money and influence to threaten politicians and governments against action,

knowing full well those politicians and governments are entitled to act in the interests of

their communities’ public health.

So, although I’m not a hater, what is there to like?

By the time this edition is published, the WTO may well have handed down its decision. It

seems unimaginable that trade advocates would allow the tobacco industry to use international

trade laws in this way. If the tobacco industry wins, trade laws will be thrown further into

disrepute, right at the time that populist politics and anti-freetrade movements are on the rise.

If the decision upholds Australia’s right to seek to protect its citizens, the industry may

nevertheless feel satisfied that they delayed other countries from acting for five years or more,

serving a purpose for their interests whatever the outcome. I hope this edition and other research

will allow more people to wise up to these tactics, ignore the threats and misinformation and

take principled action at the right time for their communities.

30 November 2016

The Honourable Nicola Roxon

Former Health Minister and Former Attorney-General of Australia

Chair, Cancer Council Australia


Volume 17, Issue 2, pp 1-20 DOI: 10.5204/qutlr.v17i2.702



TOBACCO PLAIN PACKAGING IN

AUSTRALIA: JT INTERNATIONAL SA V

COMMONWEALTH AND BEYOND

CATHERINE BOND

For as long as plain packaging legislation had been floated as an option for tobacco products

in Australia, tobacco companies had threatened legal action against such a regime. Those

threats became action when two tobacco companies separately commenced litigation in the

High Court of Australia claiming that the Tobacco Plain Packaging Act 2011 (Cth) breached

section 51(xxxi) of the Australian Constitution. Yet, the Act survived that challenge and remains

in force to this day. This article reviews the introduction of the Act and subsequent challenge,

and closely analyses the judgments comprising the decision in JT International SA v

Commonwealth. It then examines how plain packaging has operated in practice, including

enforcement of the regime and unexpected legal issues arising from its application. This article

concludes with a reflection on what the Commonwealth’s victory regarding plain packaging

means for constitutional intellectual property issues more generally.

I INTRODUCTION

As soon as plain packaging legislation was floated as an option for tobacco products in

Australia, tobacco companies threatened legal action should such a regime be passed into law.

In response, both government and academic lawyers stated that any legal action taken against

such a measure would likely be unsuccessful. When the Labor Government announced in 2010

that it had decided to introduce tobacco plain packaging, these legal threats turned into action.

Before the legislation had even been passed by the federal Parliament, Philip Morris Asia had

launched international legal action against the Commonwealth of Australia.1 Following the

passing of the Tobacco Plain Packaging Act 2011 (Cth), two tobacco conglomerates, JT

International SA and British American Tobacco Australasia (‘BAT’,2 which holds 47 per cent

of the tobacco market in Australia),3 separately commenced litigation against the

Commonwealth in the High Court of Australia. In both matters it was argued that, in restricting

the use of their registered trade marks and mandating requirements for the appearance of the

physical product, the Tobacco Plain Packaging Act breached section 51(xxxi) of the Australian

Constitution by effecting an acquisition of their intellectual property (‘IP’). That provision

grants power to the Commonwealth to acquire property from a person, company or state, but

also guarantees that, where property is acquired, the Commonwealth must compensate the

previous owner on ‘just terms’.4

Catherine Bond, Senior Lecturer, Faculty of Law, UNSW Sydney. With thanks to Michael Handler for our

helpful discussions surrounding this topic and Chantel Cotterell for research and proof-reading assistance. 1 See Attorney-General’s Department (Aust), Tobacco Plain Packaging — Investor–State Arbitration

<https://www.ag.gov.au/tobaccoplainpackaging>. 2 As noted throughout the judgments of the High Court, this matter was brought by three parties: British American

Tobacco Australasia Ltd, British American Tobacco (Investments) Ltd, and British American Tobacco Australia

Ltd. See JT International SA v Commonwealth (2012) 250 CLR 1, 19 n 51 (French CJ). 3 Department of Health (Aust), Post-implementation Review: Tobacco Plain Packaging (2016) 48

<http://ris.pmc.gov.au/sites/default/files/posts/2016/02/Tobacco-Plain-Packaging-PIR.pdf> (citation omitted). 4 See eg, Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155, 168 (Mason CJ); 184 (Deane and

Gaudron JJ).



QUT Law Review 17 (2), November 2017 | 2

When the matters were heard together before the High Court, Van Nelle Tabak Nederland BV,

Philip Morris Ltd and Imperial Tobacco Australia Ltd had been given leave to intervene on

behalf of the plaintiffs. In 2011, Philip Morris Australia comprised 36 per cent of the Australian

tobacco market; and Imperial Tobacco Australia held 16 per cent of the Australian cigarette

retail market.5 The governments of Queensland, the Australian Capital Territory and the

Northern Territory were also granted leave to intervene on behalf of the defendants, while the

Cancer Council of Australia sought to appear as amicus curiae but was ultimately denied. A

full bench of the Court, led by Chief Justice Robert French, heard the case.

During its nearly nine-year span, the French High Court delivered a number of surprising

judgments involving IP laws.6 The decision in JT International SA v Commonwealth7 (‘JTI’)

was not one of those cases.8 A majority of six justices, in five judgments, confirmed what

government and academic lawyers had been arguing all along: tobacco plain packaging was

not in breach of section 51(xxxi) of the Australian Constitution. Heydon J dissented, finding

for the tobacco companies in a judgment that was also highly critical of the Commonwealth’s

alleged attitude to section 51(xxxi).

Having survived that challenge, the Commonwealth government was free to implement and

develop its plain packaging regime. While the government itself changed hands from Labor to

the Liberal and National Coalition in 2013, the plain packaging regime has continued. There

has not always been strict compliance with the measures imposed, but, to this date, the

Commonwealth has not had to prosecute for any breach or impose any civil penalties. At the

same time, a number of unexpected legal issues have arisen, most recently in the Scandinavian

Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd9 litigation in the Federal Court

of Australia. At first instance and on appeal, the issue for determination was whether a company

which transfers cigarettes from their original packaging into plain packaging is in breach of the

Trade Marks Act 1995 (Cth).

This article examines the Tobacco Plain Packaging Act and the broader plain packaging regime

from creation, to its constitutional challenge and beyond. It focuses on the Australian

experience and does not deal with any international legal issues or developments.10 In Part II

it reviews the Commonwealth government decision to introduce a plain packaging regime and

summarises the relevant statutory provisions and their effects. This Part then moves to an

5 Department of Health, above n 3, 48 (citation omitted). 6 See eg, IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458; D’Arcy v Myriad Genetics Inc

(2015) 258 CLR 334. 7 (2012) 250 CLR 1. 8 As Liberman notes, ‘[t]he High Court’s decision upholding Australia’s plain packaging regime came as no

surprise’: Jonathan Liberman, ‘Plainly Constitutional: The Upholding of Plain Tobacco Packaging by the High

Court of Australia’ (2013) 39 American Journal of Law & Medicine 361, 380. 9 See Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086;

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2016] FCAFC 91. 10 See eg, Tania Voon, Andrew D Mitchell and Jonathan Liberman (eds), Public Health and Plain Packaging of

Cigarettes: Legal Issues (Edward Elgar Publishing, 2012); Daniel Gervais, ‘Plain Packaging and the TRIPS

Agreement: A Response to Professors Davison, Mitchell and Voon’ (2013) 23 Australian Intellectual Property

Journal 96; Mark Davison, ‘Plain Packaging and the TRIPS Agreement: A Response to Professor Gervais’ (2013)

23 Australian Intellectual Property Journal 160; Enrico Bonadio, ‘Bans and Restrictions on the Use of

Trademarks and Consumers’ Health’ [2014] 4 Intellectual Property Quarterly 326; Jonathan Griffiths, ‘“On the

Back of a Cigarette Packet”: Standardised Packaging Legislation and the Tobacco Industry’s Fundamental Right

to (Intellectual) Property’ [2015] 4 Intellectual Property Quarterly 343; Mark Davison, ‘The Various Legal

Challenges to Tobacco Packaging Regulations’ (2016) 26 Australian Intellectual Property Journal 141; Sharon

Givoni, ‘Plain Packaging Laws in Australia’ (2016) 29 Australian Intellectual Property Law Bulletin 167.



examination of the constitutional issues raised during the drafting and enactment of the

legislation and the arguments that the plaintiff tobacco companies and the Commonwealth as

defendant made before the High Court. Part III explores each of the judgments made by the

High Court — the separate findings of French CJ, Gummow, Hayne and Bell JJ, Crennan and

Kiefel JJ and the dissenting opinion of Heydon J.

In Part IV, the article moves its analysis of plain packaging beyond JTI. It examines the

operation of the regime over the past five years, including the recent post-implementation

review evaluating its effectiveness in meeting the objects of plain packaging, and recent legal

issues raised in the Federal Court of Australia over trade mark infringement for tobacco

products repackaged in plain packaging. Part V concludes this article with a brief reflection on

the relationship between the Constitution and IP in Australia and the potential for a broader

plain packaging regime.

II THE TOBACCO PLAIN PACKAGING ACT 2011 (CTH) AND THE AUSTRALIAN CONSTITUTION

A The Introduction and Operation of the Act

In the early 21st century, brands and branding have a more substantial impact on the daily lives

of the Australian community than many would care to admit. Every day decisions from what

bottled water to buy to what type of car to drive are affected by branding. The same can be said

of tobacco products, though this may be surprising to those who either do not smoke or do not

engage in frequent smoking. As Freeman, Chapman and Rimmer commented in an oft-cited

2008 article, ‘[j]ust as designer clothing, accessories and cars serve as social cues to style,

status and character so too can cigarette packs signify a range of user attributes.’11

The packaging of tobacco products and the appearance of the product themselves, whether

cigarettes, cigars, rolling tobacco or another form, have gained increasing significance as, since

the late 1980s, stricter rules have been placed on the prevalence and position of tobacco

advertising.12 A 2016 review into the Tobacco Plain Packaging Act and regime noted that, as

a result of these restrictions, ‘[t]he tobacco pack was therefore, one of the last remaining key

sources of marketing that the tobacco industry could use to influence current and potential

consumers.’13 The space available on that packaging was limited, however, when graphic

health warnings, providing confronting photographs of the health effects of smoking, were

mandated by the government.14

Many tobacco companies, long before such restrictions were introduced, had sought IP

protection for their logos, in plain and stylised formats, primarily through trade mark

registration. In Australia, for example, British American Tobacco Australia has held the trade

mark registration for the word mark ‘LUCKY STRIKE’, in Class 34 for ‘Manufactured

tobacco’, since 1958.15 It also has registered trade marks for a series of stylised trade marks,

including registration for a mark featuring the words ‘LUCKY STRIKE “IT’S TOASTED”’

11 Becky Freeman, Simon Chapman and Matthew Rimmer, ‘The Case for the Plain Packaging of Tobacco

Products’ (2008) 103 Addiction 580, 580. 12 Sam Ricketson, ‘Plain Packaging Legislation for Tobacco Products and Trade Marks in the High Court of

Australia’ (2013) 3 Queen Mary Journal of Intellectual Property 224, 225. 13 Department of Health, above n 3, 10. 14 See eg, Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 (Cth). 15 Australian TM Number 151409. See IP Australia, Trade Marks <https://www.ipaustralia.gov.au/trade-marks>.



since 1944.16 While trade marks have traditionally been viewed as a ‘badge of origin’,17 it has

also been recognised that users may derive ‘association’ benefits from aligning themselves

with certain brands, a point noted above and recognised by tobacco companies.

In the late 1980s to early 1990s the idea of plain or generic packaging of tobacco products

began to circulate within academic and government research,18 the idea being that standard or

visually unpleasant packaging would dissuade members of the community from starting

smoking, or motivate them to make the decision to quit. A number of parliamentary committees

investigated but rejected the option, but the idea continued to gain traction.19 In 2007, when

Kevin Rudd took office as the first Labor Prime Minister of Australia since 1996, a National

Preventative Health Taskforce was created to, among other matters, establish a ‘National

Preventative Health Strategy’ and to make recommendations for tackling the three biggest

preventative health issues affecting the Australian community: obesity, tobacco consumption

and alcohol consumption.20

Recommendations made by the National Preventative Health Taskforce were one of the

motivating factors behind the government’s subsequent decision to introduce plain

packaging.21 As noted in the 2016 report of the Post-implementation Review: Tobacco Plain

Packaging, these factors also included ‘[n]ational and international evidence on the

effectiveness of plain packaging’ and a series of recommendations made ‘by two separate

parliamentary inquiries’.22

One of those parliamentary inquiries was into a Private Member’s Bill, the Plain Tobacco

Packaging (Removing Branding from Cigarette Packs) Bill 2009 (Cth), introduced into the

federal Parliament by then Family First Senator Steven Fielding. The Bill was referred to the

Senate Community Affairs Legislation Committee23 and it was this consultation that generated

the first significant, concentrated wave of discussion on the constitutional elements that might

be raised by any legislation creating plain tobacco packaging, as will be considered below.

However, before the Committee was even due to report, the government (with Kevin Rudd still

in the position of Prime Minister and Nicola Roxon as Minister for Health and Ageing)

announced its decision to introduce plain packaging and the inquiry was suspended following

the dissolution of the federal Parliament, pending an election in mid-2010.24

The Labor government, now led by Julia Gillard, was returned to power and the push to

introduce plain packaging legislation resumed. The Department of Health and Ageing released

an exposure draft of the proposed legislation and sought submissions on its provisions.25 The

16 Australian TM Number 81899. 17 See eg, Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45, 65. 18 Matthew Thomas, Department of Parliamentary Services (Cth), ‘Tobacco Plain Packaging Bill’, Bills Digest,

No 35 of 2011–12, 24 August 2011, 7–8. 19 Ibid 8. 20 National Preventative Health Taskforce (Aust), Australia: The Healthiest Country by 2020: National Health

Strategy: Overview (2009) 7

<http://www.health.gov.au/internet/preventativehealth/publishing.nsf/Content/AEC223A781D64FF0CA2575F

D00075DD0/$File/nphs-overview.pdf>. 21 Department of Health, above n 3, 13. 22 Ibid 13–14. 23 Thomas, above n 18, 9. 24 Ibid 9, 10. 25 See generally, Department of Health and Ageing (Aust), Submission No 54 to House of Representatives

Standing Committee on Health and Ageing, Parliament of Australia, Inquiry into Tobacco Plain Packaging, 26

July 2011, 4



formal legislation, comprising the Tobacco Plain Packaging Bill 2011 (Cth) and Trade Marks

Amendment (Tobacco Plain Packaging Bill) 2011 (Cth) were introduced into the House of

Representatives on 6 July 2011. Despite a protracted passage, both Bills were approved by

Parliament and received Royal Assent on 1 December 2011. Section 3 provided:

(1) The objects of this Act are:

(a) to improve public health by:

(i) discouraging people from taking up smoking, or using tobacco products; and

(ii) encouraging people to give up smoking, and to stop using tobacco products; and

(iii) discouraging people who have given up smoking, or who have stopped using

tobacco products, from relapsing; and

(iv) reducing people’s exposure to smoke from tobacco products; and

(b) to give effect to certain obligations that Australia has as a party to the Convention on

Tobacco Control.

(2) It is the intention of the Parliament to contribute to achieving the objects in subsection (1)

by regulating the retail packaging and appearance of tobacco products in order to:

(a) reduce the appeal of tobacco products to consumers; and

(b) increase the effectiveness of health warnings on the retail packaging of tobacco

products; and

(c) reduce the ability of the retail packaging of tobacco products to mislead consumers

about the harmful effects of smoking or using tobacco products.

These objects take on greater significance in the arguments of the Commonwealth in JTI, and

the five year post-implementation review of the regime, discussed below.

The Tobacco Plain Packaging Act, already quite extensive at 103 pages as passed, was

supplemented by the Tobacco Plain Packaging Regulations 2011 (Cth) and designed to work

in conjunction with what became the Competition and Consumer (Tobacco) Information

Standard 2011 (Cth) (the ‘Information Standard’).26 While only the Act and Regulations were

the subject of the constitutional challenge in JTI, it is important to consider the effect of the

Information Standard, as the requirements imposed therein were relevant to the challenge.

Table 1 summarises the effect of these different enactments on the physical features of tobacco

products, providing a holistic picture of the regime itself. It focuses specifically on retail

packaging for cigarettes;27 these account for ‘the largest segment of the tobacco product market

in Australia’.28

<http://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=haa/./bi

lltobaccopackage/subs.htm>. 26 This Standard was enacted pursuant to the Competition and Consumer Act 2010 (Cth) sch 2 (The Australian

Consumer Law) s 134. See also JT International v Cth (2012) 250 CLR 1, 22 (French CJ); 36 (Gummow J); 118

(Kiefel J). 27 The terms ‘retail packaging of a tobacco product’ and ‘tobacco product’ are defined in the Tobacco Plain

Packaging Act s 4. 28 Explanatory Statement, Select Legislative Instrument 2011, No 263, Tobacco Plain Packaging Act 2011 and

Tobacco Plain Packaging Regulations 2011, 3 (Attachment A).



Table 1: Main requirements imposed by the Tobacco Plain Packaging Act, Tobacco Plain

Packaging Regulations and the Information Standard for retail packaging for cigarettes.

Physical

Feature

Requirement Enacting Measure

Shape

Rectangle, with a flip top lid

Height — between 85mm and 125mm

Width — between 55mm and 82mm

Depth — between 20mm and 42mm

Tobacco Plain Packaging Act sub-

ss 18(2), (3)

Tobacco Plain Packaging

Regulations reg 2.1.1

Colour and

finish of

packaging

Matt finish; must be a ‘drab dark brown’,

specifically Pantone 448C.29 Inner surface

must be white; lining of foil must be silver

with white backing

Made only of cardboard


ss 18(2), 19(2)


Regulations reg 2.2.1(2), (3), 4

Inner and

outer surfaces

No ‘decorative ridges, embossing, bulges or

other irregularities of shape or texture, or any

other embellishments’


s 18(1)(a)

Material not

permitted to

appear on

retail

packaging

No trade mark or mark may appear


ss 20(1), (2)

Material that

may appear

on retail

packaging

The ‘brand, business or company name for

the tobacco products, and any variant name

for the tobacco products’, in Lucida Sans

font; ‘in [a] normal weighted regular font’;

and no larger than 10-point size

Tobacco Plain Packaging Act

ss 20(3), 21


Regulations regs 2.3.1–2.3.4

Material

mandated to

appear on

retail

packaging

Front of pack must feature a warning

statement in Helvetica font, in upper case

lettering and in bold; and a graphic. These

items ‘must cover at least 75% of the total

area’ [emphasis added]

Back of pack must feature a warning

statement in Helvetica font, in upper case

lettering and in bold; a graphic ‘with an

overlay of the Quitline logo’; an explanatory

message in Helvetica font, lower and upper

case in bold and normal. These items ‘must

cover at least 90% of the total area’

[emphasis added]

Longest side must feature an information

message, in Helvetica font, in black lettering

over a yellow background, including the

word ‘WARNING’. This ‘must cover at least

25% of the total area’ [emphasis added]

Information Standard s 2.2 Item 1;

pts 3 and 4 (which contain

combinations of the warning

statements, graphics, explanatory

messages and information

messages to be applied to retail

packaging for cigarettes); pt 9 divs

3 and 4

29 Pantone 448C was ‘found in market research to be optimal in terms of decreasing the appeal and attractiveness

of tobacco packaging’: Explanatory Statement, Select Legislative Instrument 2011, No 263, Tobacco Plain

Packaging Act 2011 and Tobacco Plain Packaging Regulations 2011, 8 (Attachment B).



Chapter 3 of the Act created a range of criminal offences and civil penalties for failing to meet

the requirements, for example, in the sale or supply of tobacco products where ‘the retail

packaging does not comply’;30 or by packaging tobacco in material not complying with the

requirements of the Act and Regulations;31 or by ‘[m]anufacturing non-compliant retail

packaging’,32 among others. Special provision was made for failure to comply by a

constitutional corporation.33 The Act also provided authorities with broad powers of

investigation34 and, pursuant to section 108, mandated yearly reporting of the infringement

notices and warning letters issued by virtue of the Act.

If tobacco companies had their way, however, the High Court would find the Tobacco Plain

Packaging Act invalid before any of these elements came into effect.

B Constitutional Issues

The introduction of the Plain Tobacco Packaging (Removing Branding from Cigarette Packs)

Bill 2009 into the federal Parliament sparked tobacco companies into action. As noted above,

the Bill was referred to the Senate Community Affairs Legislation Committee, which called

for submissions, and received 58 responses.35 Philip Morris Ltd and Imperial Tobacco

Australia Ltd made submissions and, while this Bill was not as extensive as the eventual

Tobacco Plain Packaging Act, in its submission Philip Morris argued that:

In Australia, Senator Fielding’s plain packaging proposal represents an unconstitutional

property acquisition for which compensation would be due. PML is the owner and licensee of

highly valuable intellectual property used in the course of its business, including registered

trade marks, registered designs, brand goodwill and cigarette packaging. These are exactly the

elements of the pack Senator Fielding’s Bill seeks to control. PML’s property rights, including

the exclusive right to use its registered trade marks, registered designs, brand goodwill,

cigarette packaging and cigarette packaging not yet in existence, are all species of property

protected by section 51(xxxi) of the Commonwealth Constitution.36

This was one of the first of many appearances that section 51(xxxi) would make in the plain

packaging debate.37 As noted briefly above, that section operates as both a power of the

30 Tobacco Plain Packaging Act s 31. 31 Ibid s 33. 32 Ibid s 34. 33 Ibid ch 3 pt 3. 34 Ibid ch 4. 35 A full list of submissions received by the Committee is at: Senate Standing Committee on Community

Affairs, Parliament of Australia, Inquiry into Plain Tobacco Packaging (Removing Branding from Cigarette

Packs) Bill 2009 (7 June 2010)

<http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Completed_inquiries/

2008-10/plain_tobacco_packaging_09/submissions/sublist>. 36 See Philip Morris Ltd, Submission No 45 to the Senate Standing Committee on Community Affairs, Inquiry

into Plain Tobacco Packaging (Removing Branding from Cigarette Packs) Bill 2009, 30 April 2010, 3–4 (citation

omitted)

<http://www.aph.gov.au/~/media/wopapub/senate/committee/clac_ctte/completed_inquiries/2008_10/plain_toba

cco_packaging_09/submissions/sub45_pdf.ashx>. 37 In addition, for a law to be valid under the Constitution it needs to be supported by one of the heads of power

contained in s 51. The Tobacco Plain Packaging Act was said to be supported by s 51(i) (the ‘trade and commerce’

power); s 51(xviii) (the ‘intellectual property’ power); s 51(xx) (the corporations power); and s 51 (xxix) (the

‘external affairs’ power). See JT International v Cth (2012) 250 CLR 1, 113 (Kiefel J).



Commonwealth Parliament and guarantees remuneration on ‘just terms’ where the

Commonwealth exercises that power to acquire property. It reads:

The Parliament shall, subject to this Constitution, have power to make laws for the peace,

order, and good government of the Commonwealth with respect to: …

(xxxi) the acquisition of property on just terms from any State or person for any purpose

in respect of which the Parliament has power to make laws[.]

Thus, tobacco companies argued that in regulating what could appear on their cigarette packets,

including restricting the use of trade marks on those packets, the Commonwealth had acquired

their property (a proposition discussed in greater detail below). As a result, it was posited, the

Commonwealth would be liable to compensate the tobacco companies for this acquisition with

the requisite ‘just terms’ — with the unpopular idea of taxpayer funds directed towards tobacco

companies cited often over the next two years.38 Indeed, Tim Wilson, then of the Institute of

Public Affairs and now federal parliamentarian, contended that the ‘just terms’ the government

may be required to pay would amount to a ‘gift from taxpayers to tobacco companies …

[ranging] from $378m to $3,027m per year’.39 These arguments — and those figures —

continued, as the Gillard government released an exposure draft of its planned plain packaging

legislation and, later, when the Bill that would eventually become the Tobacco Plain

Packaging Act was introduced into Parliament.40

What was questionable, however, was what ‘property’ the Commonwealth acquired and how

it had done this under the Act. The Trade Marks Act 1995 (Cth) does provide that trade marks

are personal property,41 and the High Court had previously confirmed IP could be acquired

under section 51(xxxi) of the Constitution.42 Under the Trade Marks Act the owner of a trade

mark, once registered, acquires the following rights pursuant to section 20:

(1) If a trade mark is registered, the registered owner of the trade mark has, subject to this Part,

the exclusive rights:

(a) to use the trade mark; and

(b) to authorise other persons to use the trade mark;

in relation to the goods and/or services in respect of which the trade mark is registered.

Section 20 has been interpreted as creating a negative rather than a positive right — that is, the

exclusive right under Trade Marks Act does not give the trade mark owner the right to use the

38 See eg, Tim Wilson, ‘Plain Packaging Ploy Likely to Go Up in Smoke’, The Australian (online), 30 April 2010

<http://www.theaustralian.com.au/opinion/plain-packaging-ploy-likely-to-go-up-in-smoke/news-

story/d435ddb79355a3891913b7788833d4e2>; Tim Wilson, ‘Trademark Rights to Extinguish Plain Packaging

Bill?’, ABC News (online), 11 April 2011 <http://www.abc.net.au/news/2011-04-11/plain-packaging-bill-

extinguished-by-trademark-rights3f/55680>; Christian Kerr, ‘Cigarettes May be Too Hot to Handle’, The

Australian (online), 28 May 2011 <http://www.theaustralian.com.au/national-affairs/opinion/cigarettes-may-be-

too-hot-to-handle/news-story/6dbe20e3a3c427e9a6e04372eac4393e>. 39 Tim Wilson, Governing in Ignorance: Australian Governments Legislating, Without Understanding,

Intellectual Property (Institute of Public Affairs, 2010) 3 (on file with the author). 40 See eg, British American Tobacco Australia, Submission on the Tobacco Plain Packaging Bill, 6 June 2011

<http://www.bata.com.au/group/sites/bat_9rnflh.nsf/vwPagesWebLive/DOA3CLZS/$FILE/medMD8HP7TT.pd

f?openelement> ; Imperial Tobacco Australia Ltd, Submission No 51 to the House of Representatives Standing

Committee on Health and Ageing, Inquiry into Tobacco Plain Packaging, 22 July 2011

<http://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=haa/./bi

lltobaccopackage/subs.htm>. 41 Trade Marks Act 1995 (Cth) s 21(1). 42 See eg, Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134, 160–61 (Mason CJ, Brennan,

Deane, Toohey, Gaudron and McHugh JJ).



registered mark, but to exclude others from doing so43 — a point that French CJ suggested

caused difficulties for the arguments of the plaintiffs in JTI.44 Under the Tobacco Plain

Packaging Act, the Commonwealth did not gain any right to use the trade marks themselves.

Also, and significantly, the Act provided that affected marks could not be refused registration

for being contrary to law or revoked on account of non-use.45 However, the plaintiffs argued

that something less could amount to an acquisition of property. For example, Philip Morris

posited that ‘[t]he extinguishment of these property rights would afford the Commonwealth the

benefit of having full control of the cigarette packaging, freed from competing rights of PML

to control the cigarette packaging’.46 Similarly, in an oft-cited 2011 article, Stern and Draudins

commented that:

While the concept of ‘acquisition’ may require a corresponding or related benefit to be

conferred on the Commonwealth or some other person, ‘there does not need to be

correspondence either in appearance, value or characterisation between what has been lost and

what may have been acquired’.

An example of a ‘corresponding benefit’ acquired by the federal government is, in the view of

health advocates and indeed as set out in the Bill, the increased prominence of the health

messages.47

Both IP and constitutional law scholars dismissed the constitutional claims.48 Nonetheless,

these arguments were taken seriously enough by the government that the eventual Tobacco

Plain Packaging Act included a special section dealing with acquisition of property ‘out of an

abundance of caution’,49 seeking to ensure that even with an effective constitutional challenge,

no ‘gift’ would ever be payable to a tobacco company. This provision, section 15, stated in part

that the Act would ‘not apply … [where] its operation would result in an acquisition of property

… otherwise than on just terms’50 and if the restrictions on ‘use of a trade mark’ constituted an

acquisition of property, then that ‘trade mark … may be used on or in relation to the retail

packaging of tobacco products’.51

43 See eg, JT International v Cth (2012) 250 CLR 1, 31 (French CJ); 125 (Kiefel J). But see Evans and Bosland,

who consider that section 20 confers negative and positive rights: Simon Evans and Jason Bosland, ‘Plain

Packaging of Cigarettes and Constitutional Property Rights’ in Tania Voon, Andrew D Mitchell and Jonathan

Liberman (eds), Public Health and Plain Packaging of Cigarettes: Legal Issues (Edward Elgar Publishing, 2012)

48, 51–6. Heydon J in dissent took a similar view: see JT International v Cth (2012) 250 CLR 1, 79 (Heydon J). 44 JT International v Cth (2012) 250 CLR 1, 34 (French CJ). 45 Tobacco Plain Packaging Act s 28. 46 Philip Morris Limited, above n 36, 4. 47 Stephen Stern and Olivia Draudins, ‘Generic Packaging — A Bridge (Over the Bodies of IP Rights) Too Far?’

(2011) 23 Australian Intellectual Property Law Bulletin 146, 149, quoting Smith v ANL Ltd (2000) 204 CLR 493,

542 (Callinan J) (citations omitted). 48 See Mark Davison, ‘Plain Packaging Bill to Extinguish Some Tobacco Trade Marks’, ABC News (online), 15

April 2011 <http://www.abc.net.au/news/2011-04-15/plain-packaging-bill-to-extinguish-some-tobacco-trade-

marks/56666>; George Williams, ‘Plain Packaging Challenge Could Go Up in Smoke, But You Never Know’,

Sydney Morning Herald, 7 June 2011, 9; Catherine Bond, ‘Big Tobacco, Smaller Print: The Constitutional

Validity of Plain Packaging on Tobacco Products’ (2011) 22 Public Law Review 251; Evans and Bosland, above

n 43, 48–80. 49 Explanatory Memorandum, Tobacco Plain Packaging Bill 2011, 11. 50 Tobacco Plain Packaging Act s 15(1). 51 Ibid s 15(2).



C Before the High Court: Arguments of the Plaintiffs

As noted above, in early to mid-December 2011 two tobacco companies brought separate

actions before the High Court challenging the validity of the Tobacco Plain Packaging Act.

One company, JT International SA, was the owner of the trade mark for ‘Old Holborn’ rolling

tobacco and the exclusive licensee of four registered trade marks relating to ‘Camel’

cigarettes.52 It was these trade marks, in addition to its product get-up, that JTI argued

constituted property, and that the Commonwealth had subsequently acquired that property,

under the Act.53 The other group of companies, collectively referred to here and in the

judgments as BAT, was the producer and distributor of a range of cigarettes including Winfield

and Dunhill.54 BAT contended that a far broader range of its IP had been acquired under the

Tobacco Plain Packaging Act, including registered and unregistered trade marks; get-up;

goodwill and reputation; design rights; patent rights; copyright protection for certain artistic

and literary works; and packaging rights, among others.55

Gavan Griffith QC, a former Commonwealth Solicitor General, appeared for JTI. Griffith

argued that JTI’s trade marks and get-up had been acquired by the Commonwealth; as a result

of the Tobacco Plain Packaging Act these ‘rights … [were] reduced to a “bare husk”’.56 That

‘extinguishment … [gave] rise to a measurable and identifiable advantage to the

Commonwealth’ — namely, the fact that the Commonwealth was able to use the space on

cigarette packets freed up by the Act to impose the requirements of the Information Standard.57

In support of this argument, Griffith noted the High Court had previously found ‘[t]he property

acquired does not have to correspond exactly with what is taken’.58 It was also argued that the

Commonwealth’s ability to meet the objects of the statute, namely ‘improving public health

and … the effectiveness of the health warnings’ was also ‘a measurable and identifiable

advantage’.59 But for the existence of section 15, extracted above, the Act would be

unconstitutional.60

Counsel for BAT made similar arguments, stating that:

The Act deprives the trade marks of any value and it places material in the place on the

packaging where BAT would have used its trade marks. … The Commonwealth’s advantage

is control of the use of, and of using, the space on the packaging which would be used by the

mark. The Commonwealth is relieved of the cost of acquiring that space. The owner of the

‘Quitline’ mark obtains the benefit of increased prominence by reason of the prohibition of

BAT’s intellectual property.61

This idea of ‘control’ was also put forward by counsel for Philip Morris, as an intervener; it

was argued that the Tobacco Plain Packaging Act ‘confer[red] on the Commonwealth complete

52 JT International v Cth (2012) 250 CLR 1, 36–7 (Gummow J). 53 Ibid 6 (G Griffith QC) (during argument). 54 Ibid 37 (Gummow J), 90 (Crennan J). 55 Ibid 7 (AJ Myers QC) (during argument), 25 (French CJ). 56 Ibid 6 (G Griffith QC) (during argument). 57 Ibid. 58 Ibid (citation omitted). 59 Ibid. 60 Ibid 23–4 (French CJ). 61 Ibid 8 (AJ Myers QC) (during argument) (citation omitted).



control over exploitation of the packaging and over how and where the intellectual property

rights may be exploited’.62 This ‘change of control’ was the acquisition requiring just terms.63

Nonetheless, it was noted that the plaintiffs and interveners experienced ‘difficulties’ in

presenting their arguments to the Court.64 Rimmer, who attended all three days of the hearings

later commented that ‘as an expert in IP, the arguments of the tobacco companies about

acquisition of property often seemed synthetic and unreal to me’.65

D Before the High Court: Arguments of the Defendant

Stephen Gageler SC, the Commonwealth Solicitor-General who would, later in 2012, be

appointed a Justice of the High Court, represented the government. The primary arguments

disputed the characterisation of the property (while it accepted that the trade marks were

property, it was claimed that ‘get-up’ did not constitute property)66 and any alleged acquisition

of property affected by the Act. In order to effect an acquisition, the Commonwealth contended,

the government needed to ‘[acquire] an interest in property, however slight or insubstantial’.67

What had occurred here was simply ‘a diminution of use or value of a thing in which some

right of the property exists’.68

The Commonwealth also made a number of arguments that were more difficult to establish. It

was claimed that, even if an acquisition of property had occurred, no compensation was payable

as this was ‘no more than a necessary consequence or incident of a restriction on a commercial

trading activity where that restriction is reasonably necessary to prevent or reduce harm caused

by that trading activity to members of the public or to public health’.69 As will now be explored,

the members of the High Court placed different emphases on the arguments made by the

plaintiffs and defendants in their judgments.

III THE FINDINGS OF THE HIGH COURT OF AUSTRALIA

In reaching an outcome, the Justices of the High Court essentially had to answer the following

questions:

1. What constituted property in this case, for section 51(xxxi) to apply?

2. Was that property acquired by the Commonwealth, or another person, pursuant to the

provisions of the Tobacco Plain Packaging Act?

3. If there was an acquisition, did the Tobacco Plain Packaging Act provide just terms in

those circumstances; or

Regardless, did the argument of the Commonwealth as to ‘reasonable necessity’ apply,

thereby negating the payment of ‘just terms’; or

62 Ibid 9 (AC Archibald QC) (during argument). 63 Ibid 10. 64 Liberman, above n 8, 374. 65 Matthew Rimmer, ‘Cigarettes Will Kill You: The High Court of Australia and Plain Packaging of Tobacco

Products’, WIPO Magazine (February 2013)

<http://www.wipo.int/wipo_magazine/en/2013/01/article_0005.html>. 66 JT International v Cth (2012) 250 CLR 1, 14 (SJ Gageler SC) (during argument); 24 (French CJ). 67 Ibid 13 (SJ Gageler SC) (during argument) (citation omitted). 68 Ibid 14. 69 Ibid 15 (citation omitted).



Did section 15 apply, to sever the invalid provisions?70

The majority of the judgments focused on the first two questions, with some remarks as to the

final question made in obiter, and in the dissenting opinion of Heydon J.

A French CJ

While, as Liberman has noted, JTI ‘did not involve consideration of the merits of plain

packaging as a policy intervention’,71 in his judgment French CJ placed great emphasis on the

‘purposive elements reflecting public policy considerations’ that have always been present in

‘the statutory creation of [IP] rights’.72 This ‘statutory purpose’, his Honour considered, ‘may

be relevant to the question whether and in what circumstances restriction or regulation of their

enjoyment by a law of the Commonwealth amounts to acquisition of property for the purposes

of s 51(xxxi)’.73 Although French CJ was not as precise in his reference to the different types

of IP and property potentially affected by the Act, his Honour spent part of his judgment

examining the nature of IP rights and how this affected the issues of the case. As with other

members of the Court, it was considered that these were negative rights — that as BAT

proposed, were ‘rights to exclude others’, which would have ‘no substance’ if use of the rights

is restricted.74 In the present circumstances, this posed difficulties for the plaintiffs, given that

‘the negative character of the plaintiffs’ property rights leaves something of a logical gap

between the restrictions on their enjoyment and the accrual of any benefit to the

Commonwealth or any other person’.75 This factor was considered important as, while French

CJ considered that ‘space’ (on packets) was created by the regime, the Commonwealth did not

acquire any property.76

His Honour was also careful in making the distinction between a ‘taking’ of property as

opposed to an acquisition, as required by section 51(xxix), stating that ‘[t]aking involves

deprivation of property seen from the perspective of its owner. Acquisition involves receipt of

something seen from the perspective of the acquirer’.77 In establishing what constitutes an

acquisition under section 51(xxxi), the Chief Justice cited the findings of Mason J in

Commonwealth v Tasmania (‘the Tasmanian Dam Case’) noting that ‘there must be an

acquisition whereby the Commonwealth or another acquires an interest in property, however

slight or insubstantial it may be’.78 The comments of Justice Deane in that case, in relation to

the relevant ‘proprietary rights’ acquired, would play a significant role in the judgments of

Gummow J and Hayne and Bell JJ, and the dissenting view of Heydon J.

In JTI, no proprietary right, ‘interest[,] or benefit’ in relation to the IP of the plaintiffs was

acquired by the Commonwealth.79 French CJ similarly rejected the ‘space’ and ‘control’

arguments, finding ‘that the public purposes to be advanced and the public benefits to be

derived from the regulatory scheme outweigh those public purposes and public benefits which

70 Fletcher provides a similar list: see Daniel Fletcher, ‘JT International SA v Commonwealth: Tobacco Plain

Packaging’ (2013) 35 Sydney Law Review 827, 830. 71 Liberman, above n 8, 377. 72 JT International v Cth (2012) 250 CLR 1, 27 (French CJ). 73 Ibid 28. 74 Ibid 32; see also 31. 75 Ibid 34. 76 Ibid. 77 Ibid 33 (citation omitted). 78 Ibid 34, citing Commonwealth v Tasmania (1983) 158 CLR 1, 145 (Mason J). 79 Ibid.



underpin the statutory intellectual property rights and the common law rights enjoyed by the

plaintiffs. The scheme does that without effecting an acquisition.’80

B Gummow J

Gummow J was also sensitive to the specific issues posed by the nature of IP rights and the

repercussions of these for the plaintiffs’ case,81 but was critical of the arguments of the

plaintiffs regarding the ‘cardboard boxes’ as property as ‘both unreal and synthetic’.82 His

Honour also focused on the distinction between a ‘taking’ as opposed to an acquisition, finding

that the former had actually occurred in this case on account of the ‘sufficient impairment’ of

the rights of the plaintiff.83 In reaching this conclusion, his Honour took time to compare

section 51(xxxi) with the Fifth Amendment of the United States Constitution, which only

requires the lesser action of ‘taking’, rather than acquisition, in order to be invoked

successfully.84

The judgment of Gummow J was similarly precise in its unpacking of arguments regarding the

nature of the benefit or interest that must accrue to the Commonwealth or another person under

the alleged impugned legislation. As noted above, for section 51(xxxi) to apply, the

Commonwealth does not need to receive the exact rights that it is said to have acquired (for

example, here it did not need to receive ownership of the tobacco company trade marks for the

constitutional provision to be infringed). In JTI the plaintiffs sought to rely on a comment made

by Deane J in obiter in the Tasmanian Dam Case that, in some circumstances, section 51(xxxi)

can be invoked in the absence of a ‘corresponding benefit of a proprietary nature’.85 Gummow

J rejected this (although Heydon J, in dissent, explored the ‘proprietary’ aspect of this comment

in greater detail, as outlined below).

Thus, although there was a ‘taking’, there was ‘no acquisition of any property’.86 Similarly,

although Gummow J agreed that the rights were ‘denuded of their value’, that did not amount

to an acquisition.87 His Honour was also particularly dismissive of the argument that fulfilment

of a legislative goal or a treaty obligation could amount to an acquisition:

JTI submits (i) there can be an ‘acquisition’ within s 51(xxxi) which is not proprietary in nature

and (ii) the pursuit of the legislative purposes in s 3 of the Packaging Act confers the requisite

advantage upon the Commonwealth to satisfy the requirement of an ‘acquisition’. Proposition

(i) should be rejected as inconsistent with the authorities discussed above. As to (ii), pursuit of

the legislative objectives stated in s 3 of the Packaging Act does not yield a benefit or

advantage to the Commonwealth which is proprietary in nature.

No doubt the implementation in municipal law of a treaty obligation of sufficient specificity

may be a ‘purpose in respect of which the Parliament has power to make laws’ within the

meaning of s 51(xxxi). However, the reasoning and outcome in the Tasmanian Dam Case

indicates, as is apparent from the passage in the reasons of Mason J set out above, that the

80 Ibid (citation omitted). 81 Ibid 39. 82 Ibid 55 (citation omitted). 83 Ibid 47. 84 Ibid 51–2. 85 Ibid 57. 86 Ibid 47. 87 Ibid 59.



mere discharge by the Commonwealth of a treaty obligation itself is insufficient to provide an

‘acquisition’ by the Commonwealth.88

His Honour further rejected the ‘control’ argument, agreeing with the finding of the joint

judgment of Hayne and Bell JJ, discussed below, that ‘compliance with federal law’ does not

amount to control or acquisition.89

C Hayne and Bell JJ

The decision of Hayne and Bell JJ is significant for several reasons, including their reiteration

of the ‘bedrock principle’ to be applied in section 51(xxxi) cases90 and their Honours’ criticisms

of the characterisation of the ‘Commonwealth’ for the present proceedings.91 In the first section

of the joint judgment, Hayne and Bell JJ sought to dismiss a number of the different

interpretations that had been accorded to section 51(xxxi) during argument. It was noted the

Court had consistently found ‘that s 51(xxxi) does not give protection to “the general

commercial and economic position occupied by traders”’,92 and that:

There can be no acquisition of property without ‘the Commonwealth or another acquir[ing] an

interest in property, however slight or insubstantial it may be’. Giving a liberal construction to

‘acquisition’ and ‘property’ does not, and must not, erode the bedrock established by the text

of s 51(xxxi): there must be an acquisition of property.

The arguments advanced by the tobacco companies sought to depart from this bedrock

principle. … They said that there need be no acquisition of ‘property’, or of a benefit or

advantage of a proprietary nature, to engage s 51(xxxi). But that submission must run aground

on the bedrock that has been identified.93

As to what the Commonwealth was said to acquire in the case, Hayne and Bell JJ summarised

this list as follows:

‘use’ or ‘control’ of the (surface of) tobacco packaging; free advertising space; ‘control’ over

what appears on retail packaging and thus ‘control’ over the ‘exploitation’ of that packaging;

the removal from packaging of what the Commonwealth wanted removed and its replacement

by what the Commonwealth wanted put there.94

However, none of these circumstances could be said to create any acquisition of property:

‘[c]ompliance with the … [Tobacco Plain Packaging Act] creates no proprietary interest’.95

D Crennan J

The findings of Crennan J are noteworthy on account of her Honour’s recognition of how the

plaintiffs were still able to use their trade marks under the Tobacco Plain Packaging Act. After

88 Ibid 62 (citations omitted). 89 Ibid 63. 90 Ibid 68. 91 Ibid 72. 92 Ibid 67, citing Federal Council of the British Medical Association in Australia v Commonwealth (1949) 79

CLR 201, 270 (Dixon J). 93 Ibid 68 (emphasis in original), citing the Tasmanian Dam Case (1983) 158 CLR 1, 145 (Mason J). 94 Ibid 70. 95 Ibid 71.



reviewing the rights accruing to trade mark owners,96 her Honour summarised the issues for

consideration simply in the following way:

Whether subsequent legislative prohibitions or restrictions on the use of incorporeal property

created by statute will amount to an acquisition of property for the purposes of s 51(xxxi) must

depend on the nature of the rights attaching to the incorporeal property, and whether, for the

purposes of the Commonwealth, the prohibitions or restrictions: (a) give, or effectively give,

the Commonwealth or another a right to use the incorporeal property wholly or partly to the

exclusion of the owner; or (b) bestow some other identifiable benefit or advantage upon the

Commonwealth or another which can be characterised as proprietary.97

Rather than examining the discussion purely from the perspective of what benefit accrued to

the plaintiff, Crennan J considered what benefits in the trade marks remained with trade mark

owners and licensees, both through registration and in the get-up and goodwill still associated

with their brands.98 Her Honour found that while the Tobacco Plain Packaging Act ‘restricted’

how JTI, BAT and the other plaintiffs could use their trade marks, what was still permitted by

the Act, namely the appearance of the company name and cigarette or tobacco brand on the

package itself was ‘capable of discharging the core function of a trade mark — distinguishing

the registered owner’s goods from those of another, thereby attracting and maintaining

goodwill’.99 As in other majority judgments, her Honour was also critical of the ‘control’

argument100 and rejected the proposition that fulfilment of the objects of the Act plus the

additional requirements imposed by the Information Standard created any benefit.101

Therefore, while recognising that the Act imposed significant restrictions on the plaintiff’s IP,

Crennan J found that the requirements of section 51(xxxi) were not fulfilled.

E Kiefel J

The decision of Kiefel J provided the most extensive discussion of the historical regulation of

cigarette and tobacco packaging and advertising in Australia.102 Her Honour agreed that under

the Tobacco Plain Packaging Act ‘some or much of the value of … [the plaintiff’s] intellectual

property has been lost’, but this was not enough to effect an acquisition of property.103 As with

the other judgments, Kiefel J also recognised the failure of the plaintiffs to state precisely what

‘proprietary interest’ or benefit the Commonwealth had gained to create the acquisition,

beyond the ‘control of … space’ issue advanced in the course of the proceedings.104

Responding to the argument of BAT that the Commonwealth had ‘saved the cost of acquiring

the space for its own advertising’, her Honour considered that ‘the plaintiffs’ businesses may

be harmed, but the Commonwealth does not thereby acquire something in the nature of

property’.105

96 Ibid 97–9 (Crennan J). 97 Ibid 99. 98 Ibid 104–5. 99 Ibid 105 (citation omitted). 100 Ibid 106–7. 101 Ibid 108. 102 Ibid 114–18 (Kiefel J). 103 Ibid 128. 104 Ibid 129. 105 Ibid 132.



Kiefel J also considered the argument of the Commonwealth that any acquisition created by

the Act could avoid the application of the ‘just terms’ requirement where it was ‘no more than

a consequence or incident of a restriction on a commercial trading activity, where that

restriction is reasonably necessary to prevent or reduce the harm that activity causes to public

health’.106 However, her Honour rejected this argument, noting that, as drafted and interpreted

by the High Court, the constitutional provision in question ‘contains its own limits and

conditions’ — as appeared in this case — and found that the proposed ‘test of proportionality’

was not appropriate.107

F Heydon J in Dissent

In contrast to his fellow Justices, Heydon J did find that the Commonwealth was in breach of

section 51(xxxi). His Honour relied on comments made by Deane J in the Tasmanian Dam

Case, invoked by the plaintiffs but dismissed by other members of the Court, quoting the

following paragraph in his decision:

.... The range of the prohibited acts is such that the practical effect of the benefit obtained by

the Commonwealth is that the Commonwealth can ensure, by proceedings for penalties and

injunctive relief if necessary, that the land remains in the condition which the Commonwealth,

for its own purposes, desires to have conserved. In these circumstances, the obtaining by the

Commonwealth of the benefit acquired under the Regulations is properly to be seen as a

purported acquisition of property for a purpose in respect of which the Parliament has power

to make laws. .…108

In applying this reasoning to the current case, Heydon J found that while the rights granted by

the Trade Marks Act remained with their owners, the Tobacco Plain Packaging Act ‘deprived

them of control of their property, and of the benefits of control. The [Tobacco Plain Packaging

Act] gave that control and the benefits of that control to the Commonwealth’.109 Thus, in

opposition to the conclusions reached by other members of the Court, his Honour considered

the effect on the plaintiffs’ rights and the ‘control’ gained by the Commonwealth was enough

to trigger section 51(xxxi).

These findings were even extended to the space on the cigarette packets, filled by the

Information Standard, arguments also rejected in the other judgments. Heydon J phrased how

this constituted an acquisition in the following terms:

The legislation deprives the proprietors of their statutory and common law intellectual property

rights and their rights to use the surfaces of their own chattels. It gives new, related rights to

the Commonwealth. One is the right to command how what survived of the intellectual

property (the brand, business or company name) should be used. Another is the right to

command how the surfaces of the proprietors’ chattels should be employed. The proprietors

called this conscripting, commandeering or dominating the space. To put it more neutrally,

these new rights are rights of control.110

106 Ibid 122. 107 Ibid 123. 108 Tasmanian Dam Case (1983) 158 CLR 1, 287 (Deane J) quoted by Heydon J in JT International v Cth (2012)

250 CLR 1, 76 (emphasis in original). 109 JT International v Cth (2012) 250 CLR 1, 80. 110 Ibid 82–3. His Honour also rejected the argument of the Commonwealth that s 51(xxxi) did not apply where

there was ‘[t]he existence of a regulatory goal’: see 85.



In concluding his judgment, Heydon J was particularly critical of the defendant, going so far

as to describe the Commonwealth as having a ‘hatred’ for section 51(xxxi), considering it akin

to a ‘flame’ and it being the duty of the High Court to ‘ensure that that flame does not start a

destructive blaze’.111 The possibility of that ‘destructive blaze’ manifesting itself in other forms

of plain packaging is considered in the conclusion to this article.

IV BEYOND JTI

With the constitutional proceedings concluded, the Commonwealth was free to focus on the

daily implementation of the plain packaging regime, overseen by the Department of Health.

For the most part, it appears that over the last five years the regime has been successful in two

respects. First, tobacco manufacturers, suppliers and retailers appear to be taking their

obligations under the Tobacco Plain Packaging Act seriously. Second, it also appears that the

regime is meeting the objective detailed in section 3 of the Act. Still, plain packaging has led

to some unanticipated legal consequences that resulted in Federal Court action. Each of these

aspects is examined in greater detail below.

During the first five years of tobacco plain packaging in Australia, there have been no

prosecutions or civil penalties for breach of the regime. While specific information on

investigations and the circumstances leading to the issue of warning letters and infringement

notices is not publicly available, the Annual Reports for the Department of Health do provide

some basic data, as required by section 108 of the Act. As a result, it is possible to summarise

the number of matters investigated; the number of warning letters issued; and the number of

infringement notices (Table 2).

Table 2: Matters Investigated and Issuances Under the Tobacco Plain Packaging Act, 2012 to

2016112

Period Investigations Warning Letters Issued Infringement Notices

Issued

2012–2013 59 8 3

2013–2014 59 19

2014–2015 226

2015–2016 210 60 1

If one measure of success is the level of compliance with a statute, then it appears from this

data that the Act has been successful. There has been no need to reach the full level of

investigatory powers provided by the statute, no prosecutions and no civil penalties. Having

said that, these figures are quite different from those presented in other outlets, including media

coverage. In early March 2017 the Sydney Morning Herald reported that ‘[t]he Department of

Health has received 1054 individual complaints involving 746 cases’ following the

111 Ibid 89. 112 Data collated from Department of Health and Ageing and Department of Health Annual Reports: Department

of Health and Ageing (Aust), Annual Report 2012–2013 Vol 2 (2013), 240; Department of Health (Aust), Annual

Report 2013–2014 Vol 2 (2014), 191; Department of Health (Aust), Annual Report 2014–2015 (2015), 156;

Department of Health (Aust), Annual Report 2015–2016 (2016), 241. For the 2015–16 figure, it is noted in the

report that ‘[t]he majority of these matters were continuing investigations from the previous year’. Reports

available at <http://www.health.gov.au/internet/main/publishing.nsf/Content/Annual+Reports-3>.



introduction of the Tobacco Plain Packaging Act.113 While such figures could be reconciled

with the table above — for example, a complaint does not automatically lead to an investigation

— it was further stated that ‘[o]f those cases, 459 were cleared and 135 warning letters were

issued’,114 the latter figure being considerably larger than the number of warning letters listed

in Table 2. The report, based in part on evidence presented to a Senate Estimates Committee,

also noted that one $2000 fine for breach of the Act had been issued to date, and that there was

evidence that tobacco companies had been experimenting with alternative methods of

packaging that could be in breach.115

More generally, the effectiveness of the regime in meeting its objects was also highlighted in

the recent post-implementation review into the Act. In late 2014 the Department of Health

commissioned Siggins Miller Consultants to undertake a broad review into the operation and

effectiveness of the Act.116 The review consulted with and sought submissions from the

community, including health organisations, industry representatives and retailers. Perhaps

unsurprisingly, those who advocated the measures argued that tobacco plain packaging was

succeeding in lowering smoking rates in Australia, and those who disagreed with the legislation

believed there was no discernible drop in smoking uptake and rates.117 In its submission, for

example, the Institute of Public Affairs argued that not only was there evidence to suggest

national smoking rates had risen since 2012, plain packaging had caused an increase in the

importation of illegal tobacco into Australia.118 Despite those submissions, however, the Post-

implementation Review: Tobacco Plain Packaging report referred to multiple data sources

indicating that the objectives of the regime were being met and smoking levels in Australia

were decreasing. These included data as diverse as:

an increase in calls to Quitline (a staggering 78 per cent increase in New South Wales, for

example);119

a decrease in ‘daily smoking prevalence’ in Australia, ‘from 15.1% in 2010 to 12.8% in 2013’

in data collected as part of the National Drug Strategy Household Survey;120 and,

data released by the Australian Bureau of Statistics 2014–2015 National Health Survey that

‘daily smoking prevalence’ had, on their figures, dropped from 16.1 per cent in 2011–12 (the

time of introduction of plain packaging) to 14.5 per cent in 2014–15.121

In its Executive Summary, the report states that:

While the full effect of the tobacco plain packaging measure is expected to be realised over

time, the evidence examined in this PIR suggests that the measure is achieving its aims. This

evidence shows that tobacco plain packaging is having a positive impact on its specific

mechanisms as envisaged in the [Tobacco Plain Packaging Act]. All of the major datasets

examined also showed on-going drops in the national smoking prevalence in Australia. These

113 Amy Remeikis, ‘Just One $2000 Fine Issued Since Tough New Plain Packaging Laws Introduced’, Sydney

Morning Herald (online), 5 March 2017 <http://www.smh.com.au/national/health/just-one-2000-fine-issued-

since-tough-new-plain-packaging-laws-introduced-20170301-guoiu4.html>. 114 Ibid. 115 Ibid. 116 Department of Health, above n 3, 19. 117 Ibid 20–1. 118 See generally Simon Breheny, Institute of Public Affairs, ‘Plain packaging exposed[.] Submission to the

Siggins Miller Post-implementation Review — Mandatory Plain Packaging of Tobacco Products’ (March 2015)

(on file with the author). 119 Department of Health, above n 3, 30. 120 Ibid 38. 121 Ibid 41.



decreases cannot be entirely attributed to plain packaging given the range of tobacco control

measures in place in Australia, including media campaigns and Australia’s tobacco excise

regime. However, analysis of Roy Morgan Single Source Survey Data shows that the 2012

packaging changes (plain packaging combined with enhanced graphic health warnings) have

contributed to declines in smoking prevalence, even at this early time after implementation.122

In litigation before the Federal Court in 2015 and 2016, however, some unanticipated legal

consequences of the operation of the Tobacco Plain Packaging Act were revealed. In 2014,

Scandinavian Tobacco Group Eersel BC (‘STG’), which produces Henri Wintermans, Café

Crème and La Paz cigars in Holland and Belgium,123 along with its Australian subsidiary,

commenced action against Trojan Trading Company Pty Ltd (‘Trojan’) for trade mark

infringement. Trojan legally acquired and packaged STG cigars and, in order to sell these into

Australia, would ‘[remove] the cigars from the original packaging and [transfer] them

individually to compliant retail plain packaging’ that met the packaging requirements of the

Act.124 Trojan would re-apply the relevant STG trade mark, also within the confines of what

was permitted under the Act.125 The practicalities of the plain packaging regime, in Trojan’s

circumstances, were summarised as follows:

… if the Australian Parliament had not passed the plain packaging legislation, Trojan could

have sold the cigars in the boxes or packets with packaging placed on them by STG Eersel.

But Trojan could not do so because of the plain packaging legislation. Thus, it replaced the

packaging in order to conform with the law and in doing so placed the trade marks on the

packets to disclose the connection between the goods and the registered owner (not it).126

That action, however, was argued to amount to trade mark infringement pursuant to section

120(1) of the Trade Marks Act, in addition to passing off and a breach of Australian consumer

protection provisions.127 Before Allsop CJ, the matter came down to two issues: had Trojan

used the trade marks of STG as trade marks and, if so, whether section 123 of the Trade Marks

Act, which permits use of a registered trade mark that has previously been applied to ‘goods

by, or with the consent of, the registered owner’ applied in the circumstances. His Honour

answered in the affirmative to both questions. In reapplying the trade mark, Trojan has used it

within the requirements of section 120(1);128 that reapplication was a consequence of the

operation of the Tobacco Plain Packaging Act (though not a defence to what Trojan had done).

However, it was found that section 123 applied in the circumstances: Allsop CJ commented

that the provision itself was designed to ‘[protect] … non-infringing use … which does no

more than draw a connection between the goods and the registered owner’.129

On appeal, the Full Federal Court examined the same issues but, in a joint judgment, agreed

with the findings of Allsop CJ.130 Thus, while the Tobacco Plain Packaging Act has generated

122 Ibid 4. 123 Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086 (9 October

2015) [11]. 124 Ibid [18]. 125 Ibid [18], [43]. 126 Ibid [81]. 127 Ibid [2], [5]. 128 Ibid [72]. 129 Ibid [85]. The additional actions were similarly dismissed: see [97]–[99] and [101]–[102]. 130 Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2016] FCAFC 91 (24 June 2016)

[56], [67], [77]. The additional actions were similarly dismissed: see [85] and [88].



some unique, and complicated, issues, the existing provisions of the Trade Marks Act appear

to be meeting those challenges.

V CONCLUSION

In examining the findings and effect of JTI, Rimmer argued that ‘the ruling of the High Court

… will spark an “Olive Revolution” — in which other countries will follow the lead of

Australia and mandate the plain packaging of tobacco products’.131 While this may be

overemphasising the significance of the High Court decision (Ricketson has commented that

the case ‘may have limited relevance for other countries’),132 Rimmer was correct in his

prediction that other countries would be inspired by the Australian experience.

Perhaps surprisingly, what has not come to pass in Australia is an ‘Olive Revolution’ for other

products that may interfere with a healthy lifestyle — for example alcohol, soft drinks and junk

food.133 During the passage of the Tobacco Plain Packaging Act, there was speculation that

these types of products would be next to receive the plain packaging treatment and, since the

enactment of the legislation, there have been increased calls to extend the regime to these

products. Ricketson has argued that JTI ‘provides a clear basis for confidence at the national

level that analogous restrictions … would be constitutional’.134 As illustrated in this article, the

Commonwealth government arguably felt initially cautious about the legal consequences of

plain packaging laws, particularly given the continued lobbying of tobacco companies over the

two years it took to introduce the regime in Australia. However, its successful defence of the

legislation in the High Court, in addition to the findings of the post-implementation review that

the regime is meeting its objectives, may motivate the government to consider creating a

broader plain packaging regime. This space may be very different when Australian reaches the

10th anniversary of tobacco plain packaging.

131 Matthew Rimmer, ‘The High Court of Australia and the Marlboro Man: The Battle over the Plain Packaging

of Tobacco Products’ in Tania Voon, Andrew D Mitchell and Jonathan Liberman (eds), Regulating Tobacco,

Alcohol and Unhealthy Foods: The Legal Issues (Routledge, 2014) 337, 339. 132 Ricketson, above n 12, 226. 133 Ibid 239. 134 Ibid.





REGULATORY CHILL: LEARNINGS FROM

NEW ZEALAND’S PLAIN PACKAGING

TOBACCO LAW

JANE KELSEY*

Australia’s precedent-setting Tobacco Plain Packaging Act 2011 (Cth) took two and a half

years from its public announcement to come into force. The fact that New Zealand’s almost

identical legislation was still not in force six years after it was first mooted suggests it was

subject to regulatory chill through both specific threats and systemic influences within the

policy making process. This article examines the hypothesis that three elements associated with

New Zealand’s free trade and investment treaties combined to chill a National government that

was already luke-warm on a plain packaging law: perceived risks from litigation; associated

arguments pressed by politically influential industry lobbyists; and the bias in the regulatory

management regime that favours minimal intervention and empowers the tobacco industry,

consistent with contemporary trade agreements. It concludes that these mutually reinforcing

factors delayed the passage of New Zealand’s legislation, but did not see it abandoned. This

suggests that health policies supported by public opinion, international health obligations, and

precedents from other countries can withstand regulatory chill. But the difference from

Australia also highlights the need to pay more attention to ways of neutralising those factors

if a Smokefree Aotearoa New Zealand, and similarly ground-breaking public health policies,

are to be achieved.

I INTRODUCTION

The six-year unfinished saga of New Zealand’s plain packaging of tobacco legislation has all

the hallmarks of regulatory chill. The legislation is almost identical to Australia’s precedent-

setting Tobacco Plain Packaging Act 2011 (Cth). That took only two and a half years from its

inception to come into force.1 The Australian government announced its proposed legislation

in April 2010, released a consultation document and exposure draft in April 2011 and had

introduced the legislation to both houses of Parliament by August 2011. This occurred despite

Philip Morris Asia serving a notice of claim that it would challenge the law under the Australia

Hong Kong bilateral investment treaty. The Commonwealth Parliament passed the Act in

November 2011, with implementing regulations made the same month. The Act came into

force a year later on 1 December 2012.

In stark contrast, the New Zealand process will have dragged on for seven years. The

government announced a raft of policies in March 2011 that aimed to make Aotearoa New

Zealand ‘effectively smoke-free’ by 2025.2 That included possible alignment with Australia’s

* LLBHons (VUW), BCL (Oxon), MPhil (Cantab), PhD (Akl), Professor of Law, Faculty of Law, The University

of Auckland, New Zealand. 1 The history of the initiative is set out in: Cancer Council of Victoria, Plain Tobacco Packaging in Australia: A

Time-line of Legislative Developments and Litigation (2014)

<https://www.cancervic.org.au/plainfacts/browse.asp?ContainerID=timelineandinternationaldevelopments>. 2 New Zealand Government, Government Response to the Report of the Māori Affairs Committee on its Inquiry

into the Tobacco Industry and the Consequences of Tobacco Use: Final Response (Presented to the House of




plain packaging law. The consultation document was released in July 2012.3 The Smoke-free

Environments (Tobacco Plain Packaging) Bill 2013 was introduced in December 2013. The

Health Select Committee heard submissions and reported in August 2014.4 The second reading

was not held until June 2016. The Bill was given the Royal assent on 14 September 2016 to

come into force at an unspecified date, or in 18 months (March 2018) at the latest. A

consultation and exposure draft of the implementing regulations was released in May 2016,

with one month for submissions. The regulations were published a year later and the

government announced the Act would finally enter into force on 14 March 2018.5

The divergence between Australia and New Zealand is all the more striking because the Trans-

Tasman Mutual Recognition Arrangement (‘TTMRA’) 1998 permits any product that can be

sold legally in one country to be sold in the other, including branded tobacco.6 The Australian

government had to take a permanent exemption for its plain packaging legislation to avoid the

conflict with New Zealand’s law.7

Why has the New Zealand government been so reticent to follow Australia’s lead? There is

unlikely to be a definitive answer until enough time has elapsed for politicians and officials to

speak frankly. This article explores the most likely factors. It starts by developing a typology

of specific and systemic forms of regulatory chill, expanding on work done in the context of

international trade and investment agreements. The working hypothesis is that three elements

related to those agreements combined to chill a government that was already luke-warm on a

plain packaging law: perceived risks associated with New Zealand’s free trade and investment

treaties; the agency of politically influential industry lobbyists who articulated those risks; and

the bias in the regulatory management regime that favours minimal intervention and empowers

the tobacco industry, which is reinforced by international trade and investment rules. The

article concludes that these factors are mutually reinforcing and delayed the passage of plain

packaging legislation, but did not see it abandoned. That suggests health policies that are

strongly supported by public opinion, international health obligations and precedents from

other countries can withstand regulatory chill. But the difference between Australia and New

Zealand also highlights the need for more attention to ways of neutralising those three factors

if Smokefree Aotearoa New Zealand, and similarly ground-breaking public health policies, are

to be achieved.

II REGULATORY CHILL

When governments are reluctant to explain, or even admit to delaying the implementation of

the policies or laws to which they are publicly committed there are legitimate grounds to

suspect they have been influenced by factors other than the merits. It is notoriously difficult to

prove why something has not happened. It may be that governments were chilled from taking

action by such considerations as threats of legal action or the potential for collateral damage to

Representatives in Accordance with Standing Order 248 (J 1), 14 March 2011) (‘Government response to Māori

Affairs Committee Inquiry’). 3 Ministry of Health (NZ), Proposal to Introduce Plain Packaging of Tobacco Products in New Zealand.

Consultation Document (2012) (‘Consultation on Plain Packaging Proposal’). 4 Health Select Committee (NZ), Smoke-free Environments (Plain Packaging Tobacco) Amendment Bill:

Government Bill: As Reported from the Health Committee (2014) (‘Health Select Committee Report’) 5 Hon Nicky Wagner, ‘Standardised Packaging Regulations Released’ (Media Release, 8 June 2017). 6 Trans-Tasman Mutual Recognition Arrangement 1998, signed 14 June 1996 (entered into force 1 May 1998) art

3.1. 7 Schedule 1 of the Trans-Tasman Mutual Recognition Legislation Amendment (Tobacco Plain Packaging)

Regulation 2013 (Cth) provides for a permanent exemption.

Regulatory Chill: Learnings from New Zealand’s Plain Packaging Tobacco Law


important economic or social interests. Perhaps they made an assessment that the political costs

of proceeding outweighed the gains, or they may have been reluctant starters seeking an excuse

for their inaction. Decisions not to act will often be a combination of these and other factors.

Contemporary policy research has paid increasing attention to the phenomenon known as

regulatory chill in influencing such decisions. The ‘chilling effect’ is a well known concept in

the relation to free speech, where the legitimate exercise of rights is inhibited or discouraged

by threats or attacks by opponents of an idea. Regulatory chill describes the reluctance of policy

makers to adopt legislation or other regulation after factors external to the merits of the proposal

are injected into the decision-making process with the intention of influencing the regulatory

outcome. The most common examples are direct threats of, or actual, legal action or warnings

that proceeding would cause undesirable economic or reputational harm. The grounds are

usually speculative or rely on untested legal arguments. A more systemic form of chill occurs

when similar considerations are internalised through the policy criteria, procedures and

bureaucratic hierarchy of the government’s own processes.

Regulatory chill is not a new phenomenon. However, the influence on specific policies of

extrinsic factors and players outside the relevant policy community has attracted more attention

in recent years as new and far-reaching international trade and investment agreements have

grown in number, scope and prominence.

A Direct Chill

The most obvious form of chilling is where a government capitulates to specific threats of

litigation directed at a proposed policy or law. Australian political scientist Kyla Tienhaara

used several in-depth case studies to distill the impacts of actual or threatened litigation on

environmental policy, especially foreign investors’ use of international arbitration to enforce

the obligations of states under bilateral investment treaties (‘BITs’) or investment chapters of

free trade agreements (‘FTAs’).8 She found three concerns were most influential: financial

consequences of a loss due to litigation; reputational impacts among investors if the

government is sued; and negative experience of previous litigation. The existence of

enforceable external constraints could also shift the locus of power over decisions from

Parliament to the executive, as trade and other economic ministries increased their influence

over specific decisions. Noting the difficulty of knowing when governments are using these

risks as cover for controversial action or inaction, Tienhaara stressed the need for a political

science perspective when assessing how policy processes actually work, rather than purely

legal assessments.9

Threats from the tobacco industry to bring investment disputes around the world have now

become a cause célèbre.10 An early study by Canadian constitutional scholar David

Schneiderman linked Canada’s decision to drop its plain packaging proposal to threats by

Philip Morris International and JR Reynolds in 1994 to bring an investment dispute under the

8 Kyla Tienhaara, The Expropriation of Environmental Governance: Protecting Foreign Investors at the Expense

of Public Policy (Cambridge University Press, 2009) 262–4. 9 Kyla Tienhaara, ‘Regulatory Chill and the Threat of Arbitration: A View from Political Science’ in Chester

Brown and Kate Miles (eds), Evolution in Investment Treaty Law and Arbitration (Cambridge University Press,

2011) 606, 606. 10 Vividly conveyed by comedian John Oliver in a satirical segment: ‘Tobacco’, Last Week Tonight with John

Oliver (HBO) (15 February 2015) <https://www.youtube.com/watch?v=6UsHHOCH4q8>.



newly adopted North American Free Trade Agreement (‘NAFTA’).11 In later writings,

Schneiderman contrasted that retreat with Australia’s determination to proceed with its law.12

B Systemic Chill

These examples of direct chill assume a degree of conscious deliberation by decision makers.

Canadian legal scholar Gus Van Harten has stressed the institutional dimension of regulatory

chill, as policy makers internalise these and related considerations.13 Van Harten and Dayna

Scott carried out empirical research on how investor–state dispute settlement (‘ISDS’) under

the investment chapter of NAFTA impacted on environmental policy making in Ontario.14

Interviews with policy makers about internal government processes confirmed that government

ministries changed their approach to decision-making to account for concerns about ISDS.

Trade ministries and trade lawyers also exerted a lot more influence over internal government

decisions and pushed for a more centralised vetting process that gave them greater influence

over other ministries’ decisions. Once there had been one ISDS dispute, the investment rules

and potential for a dispute were likely to figure much more prominently in policy makers’

thinking. Several officials suspected that claims from trade officials that industry lobbies or

affected businesses might bring a dispute were generated by the officials themselves, because

the industries were known not to have raised them.

These scholarly analyses of regulatory chill informed legal arguments in New Zealand on

whether the proposed Trans-Pacific Partnership Agreement15 (‘TPPA’) could have a chilling

effect on government policies towards indigenous Māori. This argument was part of a claim

brought in 2015 by a number of iwi (tribes), pan-Māori organisations, and eminent individuals

to the Waitangi Tribunal.16 The claim alleged that the TPPA would breach the Crown’s

obligations to Māori under the Treaty of Waitangi 1840. The impact of ISDS on New Zealand’s

ability to achieve the smoke-free 2025 goal was one aspect of the claim. As discussed below,

the smoke-free commitment had been triggered by a report in 2010 by the Māori Affairs

Committee of the New Zealand Parliament on the disproportionate harm caused to Māori by

tobacco use.17 The legal expert appointed to assist the tribunal, Amokura Kawharu, proposed

a three-tiered typology of the potential impact of the TPPA on policy:18

(i) regulatory restraint, which is imposed by the rules of the Agreement;

11 David Schneiderman, Constitutionalizing Economic Globalization: Investment Rules and Democracy’s

Promise (Cambridge University Press, 2008) 120–4. 12 David Schneiderman, ‘How to Govern Differently: Neo-liberalism, New Constitutionalism, and International

Investment Law’ in Stephen Gill and Claire Cutler (eds), New Constitutionalism and World Order (Cambridge

University Press, 2014) 165, 173–8. 13 Gus van Harten and Dayna Nadine Scott, ‘Investment Treaties and the Internal Vetting of Regulatory Proposals:

A Case Study from Canada’ (2016) 7 Journal of International Dispute Settlement 92. 14 Ibid. 15 Trans-Pacific Partnership Agreement, concluded 5 October 2015 (not yet entered into force). 16 The broader Waitangi Tribunal claim and report are not directly relevant to this article, but the Report of the

Waitangi Tribunal, Trans-Pacific Partnership Agreement WAI-2522 and pleadings can be accessed online: TPP

Legal, Waitangi Tribunal (2016) <https://tpplegal.wordpress.com/waitangi-tribunal/>. 17 Māori Affairs Committee, House of Representatives (NZ), Inquiry into the Tobacco Industry in Aotearoa and

the Consequences of Tobacco Use for Māori (Report 1.10A, 2010) (‘Inquiry into the Tobacco Industry’). 18 WAI-2522 Trans-Pacific Partnership Agreement Inquiry Hearing (held in Wellington, 14–18 March 2015)

(‘Waitangi Tribunal’) 649–51 (Amokura Kawharu) <https://tpplegal.files.wordpress.com/2015/12/transcript-of-

hearing.pdf>.

https://tpplegal.wordpress.com/waitangi-tribunal/



(ii) regulatory chill, which occurs not only through direct threats of litigation, but

includes shifts in emphasis within policy making generally as agreements become

more wide-ranging; and

(iii) the psychological effect of officials and judicial officers not wanting their decisions

to be reviewed by an international tribunal.19

C Synthesis of Specific and Systemic Chill

This author, who was the legal expert assisting the claimants before the Waitangi Tribunal,

developed an alternative typology that distinguishes between the specific and systemic

mechanisms in Kawharu’s ‘regulatory chill’ category. A threat to litigate if a government

proceeds with a measure, or the deterrent effect of disputes brought against other countries that

have pursued similar measures, can cause a specific or direct form of chill along the lines

identified by Tienhaara. The Crown’s expert in the Waitangi Tribunal hearing described this

process as ‘prudent decisions based on risk assessment’, rather than chill.20 But the calculus is

not simply actuarial or legal. Policy makers assess the legal, financial, economic and

reputational risks of proceeding. Their decisions are heavily influenced by the disposition,

competing priorities and relative power of different politicians, official agencies, policy

advisers and government lawyers, and the access and effectiveness of the various lobbying

interests and the broader public. Arguments can slow and stop a proposed government action,

even if a state believes it has a compelling legal argument.

Chilling at the systemic level refers to mechanisms that are now built into the criteria,

procedures and institutions for government decision-making through the cross-fertilisation of

domestic processes and international agreements. Under the rubric of ‘best practice regulation’,

both Australia and New Zealand have adopted neoliberal regulatory management regimes to

evaluate the risks associated with different options to achieve a policy goal.21 The in-built

criteria give preference to the least burdensome evidence-based option to achieve that goal.22

In recent years, this domestic regime has been complemented by similar criteria and processes

in binding international trade agreements, which are subject to oversight and enforcement by

other states.23 The details of these rules are discussed later in the article.

Risk assessments within the domestic process feature advice on the country’s international

trade and investment obligations provided by trade ministries, which have assumed an elevated

status in the bureaucratic hierarchy.24 Their incursions into policy decisions unrelated to trade

and commerce reflect the direct and indirect impact of contemporary trade and investment

19 That concern was expressed by the dissenting arbitrator Professor McRae in William Ralph Clayton, William

Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware Inc v Government of Canada (2009)

UNCITRAL, PCA Case No 2009–04, a NAFTA investment dispute that was discussed extensively during the

claim. 20 Waitangi Tribunal, above n 18 (Penelope Ridings) 420. 21 Council of Australian Governments, Australian Government Guide to Regulation (2014); and Council of

Australian Governments, Best Practice Regulation: A Guide for Ministerial Councils and Nation Standard Setting

Bodies (2014); New Zealand Government, Government Expectations for Good Regulatory Practice (2017). 22 Jane Kelsey, The FIRE Economy. New Zealand’s Reckoning (Bridget Williams Books, 2015) 141–9. 23 For a discussion of the implications of the TPPA for tobacco control policy, see Jane Kelsey, ‘The Trans-Pacific

Partnership Agreement: A Gold-Plated Gift to the Global Tobacco Industry?’ (2013) 39 American Journal of Law

and Medicine 237, 246–50. 24 Specified risk factors in the New Zealand assessment process include whether any of the legislative options

have the potential to be inconsistent with or have implications for New Zealand’s international obligations; and a

second question relating to the TTMRA: New Zealand Treasury, Regulatory Impact Analysis Handbook (2013)

[1.18].



agreements on a broad range of policy areas.25 That input can be persuasive, overriding

otherwise compelling arguments in favour of a policy; yet the arguments on which it is based

are rarely contested or contestable, not least because their advice is commonly redacted from

published documents.

The procedural element of the regulatory management regime requires that interested sectors

of the public, including the affected industries within the country and offshore, are consulted

at various stages of the policy process.26 As the tobacco case study in this article shows, this

has provided numerous opportunities for the tobacco lobby to present self-serving

interpretations of the country’s legal obligations and threaten litigation, which supplemented

their input to the standard select committee processes. ‘Transparency’ chapters and rules have

also become common in recent agreements, providing rights of input for other states and

‘interested persons’ into proposed laws and regulations and to have those views considered.27

Both mechanisms are highly valued by the tobacco industry as a means to circumvent the

intention of Article 5.3 of the World Health Organization’s Framework Convention on

Tobacco Control (‘FCTC’) to constrain the tobacco industry’s ability to influence policy

decisions.28

III NEW ZEALAND’S PLAIN PACKAGING LAW

New Zealand’s most comprehensive tobacco control legislation, the Smoke-free Environments

Act 1990 (NZ), was passed back in 1990.29 Table 1 sets out the more recent history of New

Zealand’s path to implementing plain packaging reform.

Table 1: Timeline to Enactment of Tobacco Plain Packaging Legislation

Date Activity November 2010 Māori Affairs Committee Inquiry into the Tobacco Industry and the

Consequences of Tobacco Use for Māori reports to Parliament

14 March 2011 Government Response to the Report of the Māori Affairs Committee of

Inquiry into the Tobacco Industry and the Consequences of Tobacco Use

27 June 2011 Philip Morris Asia files a statement of claim against Australia’s Tobacco

Plain Packaging Act 2011 under the Australia Hong Kong Bilateral

Investment Treaty 1993

September 2011 Cabinet agrees to actively consider introduction of plain packaging in 2012

depending on advice on regulatory impacts and implications of trade and

investment agreements

December 2011 Confidence and Supply Agreement between National and Māori parties

commits to work on plain packaging for cigarettes. Tariana Turia is made

Associate Minister of Health

25 For example, the review of New Zealand’s patent law was influenced by assessments of potential conflicts with

the TPPA then under negotiation, see: New Zealand Treasury, Best Practice Regulation: Principles and

Assessments (2015) 23. 26 New Zealand Treasury, above n 24, Part 3. 27 Jane Kelsey, ‘The TPPA: Treaty-making, Parliamentary Democracy and the Rule of Law’ (TPPA Expert Paper

Series, Paper No 1, 2015) 25–26 <https://tpplegal.files.wordpress.com/2015/12/tpp-treaty-process.pdf>. 28 WHO Framework Convention on Tobacco Control, opened for signature 16 June 2003, 2302 UNTS 166

(entered into force 27 February 2005) art 5.3 reads: ‘In setting and implementing their public health policies with

respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of

the tobacco industry in accordance with national law.’ 29 A history of New Zealand’s tobacco control measures is set out in Inquiry into the Tobacco Industry, above n

17, app D.



13 March 2012 Ukraine lodges a request for consultations at the World Trade Organization

challenging Australia’s Tobacco Plain Packaging Act 2011.

23 July 2012 Consultation document: Proposal to Introduce Plain Packaging of Tobacco

Products in New Zealand and Regulatory Impact Statement is released

24 July 2012 New Zealand notifies the legislation to the WTO committee on Technical

Barriers to Trade and invites intergovernmental submissions.

5 October 2012 Consultation is closed

21 November 2012 Analysis of submissions on the consultation document is released

18 February 2013 Cabinet agrees to legislation aligned to Australia’s. Associate Minister of

Health announces the government’s decision to introduce the legislation.

19 February 2013 Prime Minister says the legislation may not proceed if Australia loses its

legal challenges

May 2013 Ministry of Health Statement of Intent 2013–2016 sets smoke-free goals for

2018

11 December 2013 Cabinet Legislation Committee approves introduction of the Smoke-free

Environments (Tobacco Plain Packaging) Amendment Bill, subject to

decisions on timing of entry into force

17 December 2013 The Bill is introduced to Parliament

11 February 2014 First reading of the Bill and referral to Select Committee

28 March 2014 Submissions close

5 August 2014 Select Committee reports on the Bill, renamed The Smoke-free

(Standardisation of Tobacco Packaging and Tobacco Products) Bill

6 November 2015 The TPPA text is made public with an exclusion for tobacco control

measures from ISDS

11 November 2015 Cabinet Social Policy Committee authorises preparation of an exposure draft

of regulations and a consultation process for 2016

17 December 2015 Philip Morris Asia loses the investment dispute challenging Australia’s plain

packaging laws

31 May 2016 Consultation document and exposure draft of the Standardised Tobacco

Products and Packaging Draft Regulations is released

30 June 2016 Second reading of the Bill

29 July 2016 Submissions on the consultation document on the Regulations close

23 August 2016 Committee of Whole House debates the Bill

8 September 2016 Third reading of the Bill

14 September 2016 Royal assent and the Act becomes law, to come into force no later than 14

March 2018

December 2016 Cabinet decides to finalise the Regulations

4 May 2017 Informal reports that Australia has successfully defended the WTO challenge

to its plain packaging law

6 June 2017 The Regulations are adopted

8 June 2017 Analysis of the submissions on the Regulations, dated May 2017, is released

14 March 2018 Date for the Act and Regulations to come into force

A The Māori Affairs Committee

Incremental steps over several decades have reduced overall tobacco use.30 But persistently

high smoking rates among Māori prompted the Māori Affairs Committee of Parliament in 2009

to launch an inquiry into the industry and the effects of tobacco use on Māori. The initiative

was driven by the Māori Party and led by Northern Māori Member of Parliament Hone

Harawira and co-leader Tariana Turia. The committee’s hard-hitting report was published in

November 2010 and stressed the urgency of effective action to stop smoking by Māori:31

30 Hon Tariana Turia, Minister of Health (NZ), Tobacco Control Achievements: Summary Report (Tabled in New

Zealand Parliament, 2014). 31 Inquiry into the Tobacco Industry, above n 17, 10.



With smoking rates amongst Māori double that of the general population, tobacco has a

particularly devastating impact on Māori, and accounts for a significant portion of the life

expectancy differential between Māori and non-Māori. More than 600 Māori die prematurely

each year from smoking-related illnesses, and this loss, as well as the preceding addiction,

erodes economic, social, and cultural wellbeing, and hinders Māori development aspirations

and opportunities. Tobacco smoking delivers a major insult to whānau ora [health of the wider

family].

The inquiry’s terms of reference called for public submissions on:

the historical actions of the tobacco industry to promote tobacco use amongst Māori;

the impact of tobacco use on the health, economic, social and cultural wellbeing of

Māori;

the impact of tobacco use on Māori development aspirations and opportunities;

what benefits may have accrued to Māori from tobacco use;

what policy and legislative measures would be necessary to address the findings of

the inquiry.32

The report’s 21 heads of recommendations included: ‘That the tobacco industry be required to

provide tobacco products exclusively in plain packaging, harmonising with the proposed

requirement in Australia from 2012’.33

B The National Government’s Policy

The government responded to the report in March 2011, committing New Zealand to ‘a longer

term goal of reducing smoking prevalence and tobacco availability to minimal levels, thereby

making New Zealand essentially a smoke-free nation by 2025’.34 ‘Minimal’ was never defined,

but it has been treated as meaning around 5 per cent of adults.35 However, the government’s

position on plain packaging was ambivalent; this was even before Philip Morris had lodged its

statement of claim in the investment dispute against Australia:

The Government is monitoring Australia’s progress on its proposal to legislate for plain

packaging of tobacco products in 2012, and will consider the possibility of New Zealand

aligning with Australia. New Zealand Government officials have commenced discussions with

respective Australian counterparts on the possible alignment. An initial report back to Cabinet

is due by 30 June 2011.36

In September 2011, Cabinet recognised the desirability of aligning the two countries’ policies,

consistent with the TTMRA, but said it would consider options ranging from full alignment

with Australia to a separate regulatory regime.37

32 Ibid 13. 33 Ibid, Recommendation 7. 34 Government Response to Māori Affairs Committee Inquiry, above n 2, 4. 35 Framework Convention Alliance, ‘Smokefree 2025 Aotearoa/New Zealand’,

<http://www.fctc.org/publications/meeting-resources/cop7-bulletins/1491-smokefree-2025-aotearoa-new-

zealand>. 36 Government Response to the Māori Affairs Committee Inquiry, above n 2, 7–8. 37 Cabinet (NZ), ‘Minute of Decision: Plain Packaging of Tobacco Products’ (19 September 2011) CAB Min(11)

34/6A; Cabinet Social Policy Committee (NZ), Plain Packaging of Tobacco Products (2011).



Following the general election in 2011, the National government signed a confidence and

supply agreement with the Māori Party in which they promised to work together towards plain

packaging.38 In April 2012 the government announced a decision in principle to introduce a

plain packaging regime aligned to Australia’s, but that was still subject to the outcome of a

public consultation process.39 The consultation document and exposure draft were released in

July 2012.40 A total of 292 submissions were received. Some 62 per cent of submitters

supported the proposal, mostly because it was a logical next step to the smoke-free 2025

targets; 38 per cent were opposed.41 The vast bulk of domestic submitters were from the health

sector, but over 60 submissions indicated links to the tobacco industry.42 Significantly, 48 of

the 292 submissions were from overseas, of whom half were from business,43 and eighteen

from government agencies and non-governmental organisations (‘NGOs’).

Cabinet decided in February 2013 that it would introduce the law.44 By that time Australia was

facing an investment dispute from Philip Morris Asia and an industry-sponsored challenge by

three countries at the World Trade Organization (‘WTO’).45 The Cabinet paper acknowledged

there was a risk of legal proceedings, but expected greater certainty from Australia’s cases by

the time New Zealand’s law was enacted; if not, the paper said its introduction could be

delayed. Associate Health Minister Turia did not seek drafting instructions until August 2013.46

The legislation was given Priority Level 5, to be referred to the Health Select Committee before

the end of the calendar year. The Cabinet Legislation Committee approved introduction of the

legislation in December 2013, noting that ‘decisions on when to enact the legislation or when

the regulations should come into force will need to take into account the progress of legal

proceedings at the World Trade Organisation’.47

38 Relationship Accord and Confidence and Supply Agreement between the National Party and the Māori Party

(December 2011). 39 Hon Tariana Turia, ‘Moving Towards Plain Packaging of Tobacco Products’ (Media Release, 19 April 2012)

<www.scoop.co.nz/stories/PA1204/S00253/moving-towards-plain-packaging-of-tobacco-products.htm>. 40 Ministry of Health (NZ), Consultation on Plain Packaging Proposal, above n 3. 41 Allen and Clarke Policy and Regulatory Specialists Ltd, Submissions Analysis on the Proposal to Introduce

Plain Packaging of Tobacco Products in New Zealand (2012) 9 (‘Submissions Analysis’). 42 Ibid 6. 43 Agroindustrias Laepe SA, Amcor, American Chamber of Commerce, British American Tobacco, Benkert

Malaysia, Benkert United Kingdom, Business Action to Stop Counterfeiting and Piracy (International Chamber

of Commerce), Czech Association for Branded Products, Dannemann Cigarrenfabrik GmbH, Davidoff and Cia

SA, Davidoff of Geneva, Director General Foreign Trade Indonesia, Economesuisse, Emergency Committee for

American Trade (US), EU Chamber of Commerce in Korea, European Cigar Manufacturers Association, General

Director of External Trade Nicaragua, Imperial Tobacco, Indonesian Chamber of Commerce, Institute for Policy

Innovation (US), International Trademark Foundation, Japan Intellectual Property Association, Japan Tobacco

International, Ministry of Industry and Commerce Dominican Republic, Ministry of Trade Indonesia, National

Association of Manufacturers (US), National Foreign Trade Council (US), Oettinger Imex AG (Switzerland),

Olympus Holdings Ltd (US), Ritmeester BV (Netherlands), Tabadom Holding Inc (Chile), TSO Packaging

Printers BV, US Chamber of Commerce, US Council of International Business, US-ASEAN Business Council,

Washington Legal Foundation, Zopag AG (Switzerland). 44 Cabinet (NZ) ‘Minute of Decision: Plain Packaging of Tobacco Products’ (18 February 2013) CAB Min(13)

4/16. 45 Ukraine, Honduras and the Dominican Republic. Cuba and Indonesia subsequently also laid complaints, and

Ukraine withdrew its complaint. 46 Cabinet Social Policy Committee (NZ), Tobacco Plain Packaging: Approval for Drafting (13 August 2013). 47 Cabinet Legislation Committee (NZ), Smokefree Environments (Tobacco Plain Packaging) Amendment Bill

(11 December 2013) LEG Min(13) 28/7.



C The Legislative Process

The Smokefree Environments (Tobacco Plain Packaging) Amendment Bill 2013 (NZ) was

introduced to the House just before it rose for 2013. No date was specified for entry into force

of the Act, leaving the government’s options open pending the outcome of Australia’s disputes.

The Bill was sent to the Health Select Committee in February 2014. Over 15 500 submissions

were received, many in standard form, with 32 heard orally. The Committee reported back in

August 2014.48 Aside from being renamed the Smokefree Environments (Tobacco

Standardised Packaging) Amendment Bill 2015 (NZ), the most significant amendment

expanded its purposes to recognise a cultural dimension. It was allocated Category 3 priority

in the 2015 legislative programme: to be passed ‘if possible’ during the year.49

The Bill then languished. It was not until 11 November 2015 that the Cabinet Social Policy

Committee considered the matter again. A Cabinet paper co-sponsored by the Office of

Minister of Trade and the Office of Associate Minister of Health claimed that the Bill had ‘been

progressing on standard parliamentary timeframes’ since its introduction in December 2013

and would shortly be given a second reading.50 However, they also acknowledged that waiting

for Australia’s WTO dispute to be resolved before drafting regulations would attract

complaints from the Bill’s supporters that ‘standardised packaging could not come into force

before 2019, seven years after the decision was taken to proceed’.51

The Associate Minister was asked to prepare an exposure draft of regulations in the first half

of 2016. The consultation would be undertaken through the Ministry of Health, working closely

with the Ministry of Foreign Affairs and Trade (‘MFAT’). The consultation document was

published in late May 2016 and submissions closed in late July 2016,52 although the analysis

was not released for another ten months.53 Of the 61 submissions, 44 were from health or

tobacco control NGOs, urging stronger regulations and inclusion of rules on compliance and

enforcement.54 A majority of the five retail organisations’ submissions reprised concerns they

had raised previously over new display laws: additional compliance costs, discrepancies with

Australia’s regulations, and the precedent effect for other products.55 The six tobacco

companies with a presence in New Zealand re-litigated the plain packaging law itself and urged

government not to act until the WTO had resolved the dispute against Australia.56

The Cabinet decided to proceed with the regulations in December 2016,57 but chose not to

announce that publicly. The regulations were adopted in late May 2017, after it became known

48 Health Select Committee Report, above n 4. 49 Cabinet Social Policy Committee (NZ), Standardised Tobacco Product Packaging: Update and Next Steps

SOC-15-MIN-0041 [6]. 50 Office of the Minister of Trade, Office of the Associate Minister of Health, Cabinet Social Policy Committee

(NZ), Standardised Tobacco Product Packaging: Update and Next Steps (November 2015) [3] (‘Standardised

Tobacco Product Packaging’). 51 Ibid [61]. 52 Ministry of Health (NZ), Standardised Tobacco Products and Packaging Draft Regulations. Consultation

Document (2016) (‘Consultation Document on Regulations’). 53 Ministry of Health (NZ), Standardised Tobacco Products Packaging Draft Regulations. Summary of

Submissions (2017) (‘Summary of Submissions on Regulations’). 54 Ibid 3–5. 55 Ibid 5. 56 Ibid 6. 57 Cabinet Legislation Committee (NZ), Smoke-free Environment Regulations 2017 (2017) [2].



informally that Australia has won the panel stage of the WTO dispute.58 The government

announced on 8 June that the Act and Regulations would come into force on 14 March 2018

(the final possible date under the Act).59 The remainder of this article considers the specific

and systemic chilling effects that might explain this prolonged legislative process: New

Zealand’s trade and investment agreements, the agency of industry lobbies, and the regulatory

management regime.

IV TRADE AND INVESTMENT AGREEMENTS

The recent prominence of trade and investment agreements in tobacco policy debates has taken

many in the health community and health policy makers by surprise. Two factors have

converged to create this effect. First, tobacco control policies have become more hard-line and

effective, prompting the industry to use every available means to resist. Second, international

trade agreements have expanded their reach quite dramatically. They now routinely include

rules on non-trade topics, notably intellectual property rights and investment, that are designed

to restrict governments’ policy options. As explained below, contemporary agreements also

impose regulatory presumptions that favour business, and procedural obligations to ensure that

foreign states and companies have prior warning and opportunities to comment on proposed

regulation. Lawyers for investors have become quite audacious in exploiting investor-rights

and investor-initiated enforcement of new investment chapters and old BITs.60

Tobacco companies have embraced these opportunities as they become increasingly

marginalised from domestic policy-making, especially in the wake of the FCTC.61 They and

their support groups have also widened their constituency of support with warnings of a

slippery slope: that is, acceptance of plain packaging of tobacco as compliant with international

trade and investment treaties will spread to labelling of other commercial products and exports.

Warnings that measures will breach the trade and investment rules are especially potent in New

Zealand. Successive governments have prided themselves on the country’s reputation as an

exemplary international trade citizen. New Zealand was a founding member of the General

Agreement on Tariffs and Trade (‘GATT’) in 1947 and the WTO in 1995.62 It has only one

active BIT, with Hong Kong, dating from 1995,63 but recent governments have enthusiastically

negotiated new broad-ranging FTAs that increase the country’s exposure to complaints when

regulating intellectual property rights, technical barriers to trade, and trade in services, as well

58 ‘Tobacco Logo Ban Said to Get WTO Backing in Landmark Case’, Bloomberg (online), 4 May 2017,

<https://www.bloomberg.com/news/articles/2017-05-04/wto-said-to-uphold-australia-s-ban-on-cigarette-

logos>; Hon Todd McClay and Hon Nicky Wagner, ‘New Zealand Confident on Plain Packaging WTO Case’

(Media Release, 6 May 2017). 59 Hon Nicky Wagner, ‘Standardised Packaging Regulations Released’ (Press Release, 8 June 2017)

<http://www.scoop.co.nz/stories/PA1706/S00129/standardised-packaging-regulations-released.htm>. 60 Cecilia Olivet and Pia Eberhardt, Profiting from Injustice: How Law Firms, Arbitrators and Financiers are

Fuelling an Investment Arbitration Boom: Report (Corporate Europe Observatory and Trans-National Institute,

2012). 61 Jappe Eckhardt, Chris Holden and Cynthia D Callard, ‘Tobacco Control and the World Trade Organization:

Mapping Member States’ Positions After the Framework Convention on Tobacco Control’ (2016) 25 Tobacco

Control 692, 694. 62 General Agreement on Tariffs and Trade, opened for signature 30 October 1947, 55 UNTS 187 (entered into

force 1 January 1948). 63 The Agreement between the Government of Hong Kong and the Government of New Zealand for the Promotion

and Protection of Investments, signed 6 July 1995 (entered into force 5 August 1995) art 8.3 reads: ‘The provisions

of this Agreement shall not in any way limit the right of either Contracting Party to take measures directed to …

the protection of public health … provided that such measures are not applied in a manner which would constitute

a means of arbitrary or unjustified discrimination.’



as to investor protections and investor enforcement.64 Development of New Zealand’s plain

packaging legislation coincided with negotiations for the TPPA, where the risk of US

corporations using ISDS to challenge New Zealand’s health policies featured prominently.65

A Specific Threats and Deterrents

The tobacco industry and its allies, local and foreign, played to the New Zealand government’s

sensitivity at every opportunity. The analysis of submissions on the consultation document in

2012 shows 31 of the 292 submitters referred to the potential legal implications, many of whom

were unlikely to support the proposal. They included 10 international manufacturers, seven

international organisations, two manufacturer /exporter /importers, one professional

association, and one international retailer.66 In particular, their submissions alleged breaches

of the WTO’s Agreement on Trade-related Intellectual Property Rights (‘TRIPS’) and TBT,

as well as the Paris Convention for the Protection of Industrial Property (1883).67 The

intellectual property rights argument was also posed as a domestic legal issue of property rights

and of freedom of expression under the Bill of Rights Act 1990 (NZ).68

These arguments were echoed in submissions to the Select Committee. The industry lobby

focused on three issues: investment and WTO disputes; impacts on other exports of

establishing a precedent for tobacco; and New Zealand’s reputation. Their threats to bring an

investment dispute were aggressive but vague. British American Tobacco New Zealand

(‘BATNZ’) told the Select Committee on the plain packaging Bill in 2014 that the legislation

would breach investment treaties that protected companies within their group and would entitle

them to ‘an arbitral award requiring New Zealand to repeal the legislation and/or pay

substantial sums in compensation’.69 Their companies would take ‘all steps necessary to protect

their investments from unlawful government interference’.70 Imperial Tobacco’s Global

Director of Corporate Affairs Axel Gietz refused to rule out legal action when presenting its

submission on the Bill.71

The tobacco industry was supported by umbrella lobby groups. The New Zealand Food and

Grocery Council was the most important. Chief executive Katherine Rich focused on potential

breaches of TRIPS and investment agreements, noting the latter allowed private companies to

take action against governments.72 While disavowing expertise on the details and likelihood of

64 Penelope Ridings, ‘Investment Negotiations: Walking the Tightrope Between Offensive and Defensive

Interests’, Insider (online), 5 October 2016 <http://insider.thomsonreuters.co.nz/2016/10/investment-

negotiations-walking-the-tightrope-between-offensive-and-defensive-interests/>. 65 Jane Kelsey, Hidden Agendas: What We Need to Know About the TPPA (Bridget Williams Books, 2013), 22–

6. 66 Submissions Analysis, above n 41, 48. 67 Paris Convention for the Protection of Industrial Property (1883), opened for signature 20 March 1883, (entered

into force 7 July 1884) as revised at Stockholm 1967, 828 UNTS 306. 68 Submissions Analysis, above n 41, 48. 69 British American Tobacco (NZ), Submission No 226 to the Ministry of Health (NZ), Proposal to Introduce

Plain Packaging of Tobacco Products in New Zealand, 5 October 2012, 6

<https://www.health.govt.nz/system/files/documents/pages/sub_226.pdf>. 70 Ibid 12. 71 Imperial Tobacco New Zealand Ltd, Submission to the Health Select Committee, Limits on Smokefree

Environments (Tobacco Plain Packaging) Amendment Bill 2013, 2014 (‘Imperial Tobacco Submission 2014’). 72 New Zealand Food and Grocery Council, Introductory Statement from Katherine Rich, New Zealand Food &

Grocery Council (NZFGC) on the Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill (20

May 2014) (‘NZFGC Introductory Statement’).

http://insider.thomsonreuters.co.nz/2016/10/investment-negotiations-walking-the-tightrope-between-offensive-and-defensive-interests/

http://insider.thomsonreuters.co.nz/2016/10/investment-negotiations-walking-the-tightrope-between-offensive-and-defensive-interests/



retaliation, she suggested it would be interesting to know whether MFAT officials had advised

the Committee on the risk of litigation, in particular the views of Indonesia (which had brought

a tobacco-related dispute against the US at the WTO73). Rich even described ISDS as a tool

that is ‘modeled on basic tenets of democratic legal systems – promotes economic development

by protecting investors from unequal and arbitrary action on the part of governments’.74 Threats

were often accompanied by self-serving legal interpretations. An unnamed manufacturer baldly

asserted that:

Public health justifications would not be a defence if the Government breaches an Investment

Treaty through unfair, inequitable and discriminatory conduct. Even if in theory there could

be a defence, given the absence of evidence that Plain Packaging would reduce tobacco

consumption, the existence of suitable alternative tobacco control measures, and the fact that

tobacco remains a legal product, it would be impossible for the Government to discharge its

burden of proving that Plain Packaging is a proportionate, pressing and reasonable measure

that is necessary for the protection of public health.75

The manufacturer hoped that ‘legal proceedings [would] not be required, but [it would] take

all measures necessary to protect our valuable property rights from unlawful interference’.76

Some smoke-free advocates addressed the industry threats head-on, with 31 submissions on

the 2012 consultation document arguing that health policy must take primacy over actions that

might infringe a company’s rights, or as one said ‘public health overrules commercial profit or

free trade for this industry’.77 A number acknowledged there were legal risks, but said that was

no reason not to proceed. The Ministry of Health was urged not to be swayed or deterred by

offshore business interests.78

There was a second limb of the industry arguments that sought directly to chill the policy

process: the consequential risk to other products of setting a precedent on tobacco. This was

almost certainly a more important consideration to the governing National Party, with its strong

farming base and ideological commitment to free trade, than the smoke-free policy itself.

Warnings of a slippery slope were especially potent coming from the Food and Grocery

Council.79 Katherine Rich warned the Select Committee that compromising the right of

companies to use their trademarks ‘will then become the beginning of standardised packaging

for other products considered a health risk such as wine, confectionary and dairy products,

particularly infant formula’.80 She predicted ‘the ensuing intellectual property scrap [on plain

packaging of tobacco] could result in a pyrrhic victory for New Zealand’:81 if the WTO upheld

the challenge to Australia’s law ‘then plain packaging for food and wine on which the New

<http://www.fgc.org.nz/upload/submissions/2014/Introductory%20Stmt%20to%20Select%20Cttee%20re%20T

obacco%20-%20K%20Rich%2020%20May%202014.pdf>. 73 Indonesia brought a successful WTO dispute challenging the US ban on clove-flavoured cigarettes (Appellate

Body Report, United States—Measures Affecting the Production and Sale of Clove Cigarettes [222–23], WTO

Doc WT/DS406/AB/R (4 April 2012), and joined the WTO dispute as a complainant against Australia in 2013. 74 NZFGC Introductory Statement, above n 72. 75 Quoted in Submissions Analysis, above n 41, 48–9. 76 Ibid. 77 Ibid 52. 78 Ibid 68. 79 New Zealand Food and Grocery Council, Submission to Parliamentary Health Committee, The Smoke-free

Environments (Tobacco Plain Packaging) Amendment Bill 2013, 28 March 2014 (‘Food and Grocery Council

Submission’). 80 NZFGC Introductory Statement, above n 72, 2. 81 Ibid 1.

http://www.fgc.org.nz/upload/submissions/2014/Introductory%20Stmt%20to%20Select%20Cttee%20re%20Tobacco%20-%20K%20Rich%2020%20May%202014.pdf

http://www.fgc.org.nz/upload/submissions/2014/Introductory%20Stmt%20to%20Select%20Cttee%20re%20Tobacco%20-%20K%20Rich%2020%20May%202014.pdf



Zealand economy has a heavy reliance, may well be at risk’.82 Ironically, given the Council’s

members are deeply integrated with Australian firms, Rich suggested that a ruling of

compliance with the TTMRA might well jeopardise all trade except trans-Tasman trade.83

The industry also played the reputation card. The Food and Grocery Council stressed New

Zealand’s reputation as a ‘very principled country in its trading, government, community and

relationships, and a good global citizen’.84 Media reported a big US corporate lobby group had

warned the plain packaging Bill both violated New Zealand’s trade obligations and damaged

its leadership credentials.85

B The Government’s Response

Although heavily redacted, the official documents released on the government’s own initiative

and under New Zealand’s Official Information Act 1982 show the officials and Cabinet

evaluated the potential risks relating to the WTO, ISDS and the TTMRA at every stage of the

policy process. Table 1 shows a strong correlation between the timing of New Zealand’s

decisions and the status of Australia’s WTO dispute and the ISDS case under the Hong Kong–

Australia BIT. Prime Minister John Key conceded in early 2013 that the litigation was behind

the delays in progressing the law.86

It could be argued that the government was simply seeking to ensure compliance with its legal

obligations — what Kawharu referred to as ‘regulatory restraint’ and the Crown’s expert called

‘prudent decision making’. However, New Zealand’s exposure to legal risk was no more, and

arguably less than Australia’s, because New Zealand had fewer agreements, and an exception

for non-discriminatory health measures in its only bilateral investment treaty (with Hong

Kong),87 — an exception which was not in the Australian BIT. While Australia’s win in the

investment dispute88 was crucial to Cabinet’s decision to pass the Bill, it noted that it could still

delay the Act’s entry into force.89 Presumably, Cabinet was waiting for the WTO decision as

well. There had been considerable criticism in the WTO’s TBT Committee when New Zealand

notified the proposed law in July 2012.90 The government joined the WTO dispute against

Australia as a third party, which gave it access to the arguments and an ability to assess the

likely outcome. Cabinet’s decision in June 2017 to proceed was taken after the parties had

received the confidential draft report, but without a formal decision.91

82 Food and Grocery Council Submission, above n 79, 7. 83 Ibid 4. 84 Ibid 6. 85 Radio New Zealand, ‘Minister Defends Plain Packaging’, Morning Report, 14 February 2014 (William

Reinsch) <http://www.radionz.co.nz/news/national/235694/minister-defends-plain-packaging>. 86 ‘Key Admits Plain Cigarette Packaging May Not Go Ahead’, TVNZ, 19 February 2013 (on file with author).

At the time, New Zealand had few bilateral investment treaties and investor chapters in free trade agreements: see

Jane Kelsey, International Trade and Investment Law Issues Relating to New Zealand’s Proposed Tobacco

Control Policies to Achieve an Effectively Smokefree Aotearoa New Zealand by 2025: Report to the Tobacco

Control Research Turanga (2012) 40-1 (‘Report to the Tobacco Control Research Turanga’) 31–4. 87 See above n 63. 88 Philip Morris Asia Ltd v The Commonwealth of Australia (Award, Permanent Court of Arbitration, Case No

2012-12, December 2015). 89 Standardised Tobacco Product Packaging, above n 50 [19]. 90 New Zealand, ‘Notification’ to WTO Committee on Technical Barriers to Trade, WTO Doc G/TBT/N/NZL/62

(24 July 2012). 91 Associate Minister of Health, Smoke-free Environments Legislation 2017 (Cabinet Legislation Committee

(NZ), 7 June 2017) [6]–[10] (‘Smoke-free Environments Legislation 2017’).

http://www.radionz.co.nz/news/national/235694/minister-defends-plain-packaging



The agreement that governments could block investor–state disputes over tobacco policies in

the TPPA seems unlikely to have been a legal consideration,92 as that agreement could not have

come into force before the legislation, and the exclusion would not prevent state–state

enforcement of the investment chapter or other chapters in the agreement.93 There is no

equivalent protection in the free trade agreement that New Zealand negotiated with South

Korea during the same period and which came into force in December 2015.

The other legal obstacle, the TTMRA,94 had been removed in 2013. Australia initially took a

temporary exemption for tobacco products to prevent the industry by-passing the plain

packaging law by importing branded tobacco products from New Zealand.95 Temporary

exemptions are meant to last for 12 months.96 Australia took a permanent exemption in 2013

as the New Zealand government continued to prevaricate.97

Overall, the pure ‘legal compliance’ argument is unconvincing. The publicly available policy

documents show the government was concerned about the potential for litigation and its

effects, not just the legality of its actions.98 For example, the paper for the Cabinet Committee

in November 2015, entitled ‘Update and Next Steps’, focused on international developments.99

The headings show the officials provided assessments of the hearings in the WTO dispute

against Australia. That was followed by a large redacted section on litigation risk, which

officials said informed their advice on the timeline.

The same paper discussed the industry’s response to moves in other countries.100 It noted that

the United Kingdom and Ireland had both passed detailed legislation for standardised

packaging to come into force from 20 May 2016 and not faced WTO or ISDS disputes,

although tobacco companies had commenced domestic legal proceedings which were now

before the European Court of Justice. Canada, France, Norway and Singapore had notified their

intentions to the WTO. The commentary accompanying these observations was also blacked

92 Trans-Pacific Partnership Agreement, art 29.5: ‘Tobacco Control Measures: A Party may elect to deny the

benefits of Section B of Chapter 9 (Investment) with respect to claims challenging a tobacco control measure of

the Party. Such a claim shall not be submitted to arbitration under Section B of Chapter 9 (Investment) if a Party

has made such an election. If a Party has not elected to deny benefits with respect to such claims by the time of

the submission of such a claim to arbitration under Section B of Chapter 9 (Investment), a Party may elect to deny

benefits during the proceedings. For greater certainty, if a Party elects to deny benefits with respect to such claims,

any such claim shall be dismissed.’ 93 Notably Chapter 8 Technical Barriers to Trade, Chapter 9 Intellectual Property, and Chapter 10 Cross-Border

Trade in Services. The exclusion also does not affect the procedural chapters that entitle the tobacco industry to

have input on proposed regulation. 94 New Zealand and Australia agreed to adopt a mutual recognition principle that goods produced in or imported

into one country that can lawfully be sold in that country can also be sold lawfully in the other, without the need

to comply with any of its legal requirements relating to sale. This obligation is implemented through each

country’s domestic laws. See Trans-Tasman Mutual Recognition Act 1997 (NZ) s 10. See further Kelsey, above

n 86, 40–1. 95 The legislative history in the Trans-Tasman Mutual Recognition Legislation Amendment (Tobacco Plain

Packaging) Regulation 2013 (Cth) says: ‘The Tobacco Plain Packaging Act 2011 and these Regulations were

temporarily exempted from the operation of the Trans-Tasman Mutual Recognition Act 1997 under s 46 of that

Act and s 109 of the Tobacco Plain Packaging Act 2011. The temporary exemption operated from 1 October 2012

until the commencement of the Trans-Tasman Mutual Recognition Legislation Amendment (Tobacco Plain

Packaging) Regulation 2013’, which provided for a permanent exemption. 96 Trans-Tasman Mutual Recognition Arrangement 1997, [4.2.1] and [4.2.2]. 97 Trans-Tasman Mutual Recognition Act 1997 (Cth) sch 2, pt 2. 98 Standardised Tobacco Product Packaging, above n 50 [6]. 99 Ibid. 100 Ibid [10]–[11].



out. But it is clear that these considerations were determinative in the decision in November

2015 to release regulations for consultation: ‘This paper therefore proposes taking a next step

towards developing the detailed regulations needed to implement’ the law.101

The discussion of trade law issues in the Cabinet paper regarding adoption of the regulations

in June 2017 was also heavily redacted.102 While noting leaked information that Australia had

prevailed in the WTO dispute, it said that could not be confirmed until the final report was

released, which was not expected until late 2017 or early 2018. The paper then noted the default

date for the Act to come into force was 14 March 2018. This clearly implied that March 2018

was as long as the government could legally delay the Act’s implementation, whatever the

contervailing considerations.

There is no question that legal risks were a factor in delaying the New Zealand legislation. As

noted, New Zealand had fewer concrete legal risks under investment agreements than

Australia, and similar WTO exposure, but Australia chose to stare down those risks. There are

certainly grounds to infer that the threats to pursue such litigation constituted a specific or direct

chill on the government, and that associated risks to reputation and other exports were another

factor in delaying the legislation.

V POLITICAL AGENCY

Regulatory chill requires agency. Not every intervention by pro-tobacco interests will

contribute to a specific or direct chilling effect. But many will. They will also contribute to or

reinforce the systemic or institutionalised bias that chills a government’s regulatory decisions.

This section explores both dynamics in relation to New Zealand’s plain packaging law.

New Zealand can be described as an intimate society. In a small country with relatively few

powerful corporations and individuals, the corporate–state nexus is particularly close. Political

party officeholders and donors, well-connected bloggers, corporate funded think tanks and

their executives, and industry lobbyists have ready access to the inner circle of law makers and

senior bureaucrats. There is a small revolving door of lobbyists and consultants who have been,

or subsequently become, politicians or trade negotiators. These interactions take place within

a very thin political system of a unitary House of Parliament. Since the introduction of a Mixed-

Member Proportional Representation electoral system in 1996, however, a requirement to

govern through coalitions has generated a political market in which minor parties trade their

allegiance for the government’s endorsement of favoured policies. As plain packaging showed,

such commitments can prove fickle.

Small country syndrome also impacts on the community of public health advocates and

academics. Access to funding for tobacco control research, programmes and advocacy is highly

competitive, and allocations are susceptible to political sensitivities. The government buried a

report by this author on the implications of New Zealand’s free trade and investment

agreements for the Smoke-free 2025 goal,103 and the larger research grant of which it was part

was threatened. Advocacy groups may seek to minimise such risks by not actively engaging

on politically sensitive issues, such as demanding protection for tobacco control policies during

trade and investment negotiations. But without their pressure, the pro-tobacco lobby can wield

disproportionate influence.

101 Ibid [15] [emphasis added]. 102 Smoke-free Environments Legislation 2017, above n 91, [6]–[10]. 103 Report to the Tobacco Control Research Turanga, above n 86.



A Tobacco Industry Lobby

The tobacco industry deployed a familiar raft of campaign activities and strategies to oppose

plain packaging, supplemented by personal links to politicians and the governing party.

Imperial Tobacco New Zealand and BATNZ have the largest commercial presence in New

Zealand. During the initial public consultation in 2012 the latter launched a mass media

campaign under the slogan Agree-Disagree, using standard industry arguments to establish a

constituency of support.104 The Ministry of Health rejected complaints that the campaign broke

the law by promoting smoking, saying there were insufficient grounds for a prosecution.105

Canadian health academics noted similarities with the anti-plain packaging campaign there by

JTI-MacDonald, with the equally unwarranted title of Both Sides of the Argument.106 Imperial

Tobacco joined with Philip Morris and British American Tobacco in producing a multi-choice

postcard targeted towards retailers and their workers and a template for retailers to fill in, and

had a postcard of its own. Several generic letters were developed for retailers, one of which

referred to the Australian litigation. Smokefree NZ, the Cancer Society, the Heart Foundation

and Plainpacks.org also co-sponsored two postcards. The final count showed 8201 postcards

in favour of the law and 11 814 opposed.

However, as in most countries, the tobacco industry had an image problem and personal

appearances backfired. Imperial Tobacco’s submission on the Bill in 2015 was the most

verbally aggressive among the industry. It described the legislation as ‘draconic’,

‘disproportionate and unlawful’, ‘premature’, in breach of New Zealand investment and trade

agreements, lacking an evidence base, and more.107 At the same time, it depicted itself as a

‘truly Kiwi company’ committed to creating jobs, trading and sourcing with local suppliers and

businesses, and collecting over $350 million in taxes and other duties. Imperial Tobacco’s

Global Director of Corporate Affairs, Axel Gietz, who presented their 2015 submission,

returned during consultations on the tobacco packaging Regulations in 2016. The visit was a

public relations disaster. Veteran public broadcaster Kim Hill lost her patience over his

obfuscations,108 and co-leader of the Māori Party called him a ‘corporate executioner’ and a

‘peddler of death’ on television.109

B Pro-tobacco Lobbyists

Big Tobacco relied on more credible lobby groups, notably the New Zealand Food and Grocery

Council whose image and broader warnings about the slippery-slope effects of plain packaging

were more likely to resonate with politicians, media and consumers. Their messaging, focused

104 Topics of the television advertisements were: theft of intellectual property, effects on wine exports of breaching

trade rules, copying Australia’s untested laws, freedom of choice, and the slippery slope of plain labels for beer.

Andrew Morehu Waa et al, ‘Analysis of the Logic and Framing of a Tobacco Industry Campaign Opposing

Standardised Packaging Legislation in New Zealand’ (2016) Tobacco Control (Online First)

doi:10.1136/tobaccocontrol-2016-053146. 105 Ibid 1. 106 Julia Smith, ‘Both Sides of the Argument? JTI-MacDonald’s Anti-Plain Packaging Spin in Canada’ BMJ Blog

(online), 1 November 2016 <http://blogs.bmj.com/tc/2016/11/01/both-sides-of-the-argument-jti-macdonalds-

anti-plain-packaging-spin-in-canada/>. 107 Imperial Tobacco Submission 2014, above n 71. 108 Radio New Zealand, ‘Axel Gietz: Tobacco and Plain Packaging’ Saturday Morning, 26 June 2016

<http://www.radionz.co.nz/national/programmes/saturday/audio/201805885/axel-gietz-tobacco-and-plain-

packaging>. 109 Rob Stock, ‘MP Marama Fox calls Imperial Tobacco Spokesman a “peddler of death” on The Nation’, Stuff

(online) 2 June 2016 <http://www.stuff.co.nz/business/81453260/mp-marama-fox-calls-imperial-tobacco-

spokesman-a-peddlar-of-death-on-the-nation>

http://www.radionz.co.nz/national/programmes/saturday/audio/201805885/axel-gietz-tobacco-and-plain-packaging

http://www.radionz.co.nz/national/programmes/saturday/audio/201805885/axel-gietz-tobacco-and-plain-packaging

http://www.stuff.co.nz/business/81453260/mp-marama-fox-calls-imperial-tobacco-spokesman-a-peddlar-of-death-on-the-nation

http://www.stuff.co.nz/business/81453260/mp-marama-fox-calls-imperial-tobacco-spokesman-a-peddlar-of-death-on-the-nation



entirely on factors designed to chill the government decision, largely set the terms of the debate

in the media and consultation documents.

According to the Food and Grocery Council’s website, it ‘promotes the role the industry plays

in the health and nutrition of New Zealanders in making better diet and lifestyle choices. …

[and] at all times promotes the facts about safe food and good nutrition using an evidence-

based approach’.110 Chief executive Katherine Rich was a senior National Party politician who

left Parliament in 2008 after nine years in opposition. Rich presented the Council’s submission

to the plain packaging Bill ‘on behalf of companies who sell products through supermarkets’,

including tobacco.111 She said the Council supported all current laws and regulations relating

to the production and sale of tobacco (although it had opposed legislation introducing new

restrictions on displays in 2011).112 In 2012 the National Party, then in government, appointed

Rich to its newly established Health Promotion Authority, whose job is to lead and support

nation-wide health initiatives. Both she and the government denied any conflict of interest.

However, Rich resigned in 2015, despite being cleared of conflict of interest allegations arising

from leaked emails that suggested links to attacks by a right-wing blogger on academics who

promoted tobacco and alcohol control policies.113

Other pro-tobacco lobbyists had strong political connections. Carrick Graham, son of a former

National Party Cabinet minister, rose from selling tobacco to become spokesman for British

American Tobacco from 1996 to 2006. His communications company acted for known tobacco

front groups, such as the Association of Convenience Stores.114 Graham was quoted in an

interview as bragging that: ‘Victory … is when the other side starts to use his language and

gets forced onto an agenda he wrote’.115 In 2014 Graham was implicated in the covert

coordinated campaign to smear public health researchers who were advocating evidence-based

interventions to cut obesity, and smoking and alcohol-related diseases.116 Graham paid a right-

wing blogger to post these stories without disclosing the author (himself) or his clients, who

were thought to be members of the Food and Grocery Council.117

C Coalition Parties in Government

Agency is important to achieving regulatory chill. However, agents can also neutralise or

counteract chill, especially within the government itself. New Zealand’s government was led

throughout the plain packaging policy process by the National Party, traditionally the ‘party of

business’ and a strong advocate of a neoliberal market economy. There is nothing to indicate

that National had any real commitment to a smoke-free agenda. In addition to appointing Rich

to the Health Promotion Authority, National defied criticism when it selected two former

110 New Zealand Food and Grocery Council, About (2017) <http://www.fgc.org.nz/about>. 111 NZFGC Introductory Statement, above n 72. 112 New Zealand Food and Grocery Council, Submission to Parliament of New Zealand, Smoke-free Environments

(Controls and Enforcement) Amendment Bill, 28 January 2011. 113 Office of the Auditor-General (NZ), Health Promotion Authority — Katherine Rich — Potential Conflict of

Interest (2015); Nicky Hager, Dirty Politics: How Attack Politics is Poisoning New Zealand’s Political

Environment (Craig Potton Publishing, 2014). 114 Action on Smoking and Health New Zealand, Front Groups (2017) <http://www.ash.org.nz/the-evidence/the-

tobacco-industry/tobacco-industry-conduct/front-groups/>. 115 Peter Newport, ‘Carrick Graham: Without Apologies’, North and South (online), 18 June 2015

<http://www.noted.co.nz/currently/politics/carrick-graham-without-apologies/>. 116 Hager, above n 113; Nathan Cowie, ‘New Zealand: Dirty Politics Raises Conflict of Interest Concerns’, BMJ

Blog (online), 2 October 2014 <http://blogs.bmj.com/tc/2014/10/02/new-zealand-dirty-politics-raises-conflict-of-

interest-concerns/> 117 Newport, above n 115.

http://blogs.bmj.com/tc/2014/10/02/new-zealand-dirty-politics-raises-conflict-of-interest-concerns/

http://blogs.bmj.com/tc/2014/10/02/new-zealand-dirty-politics-raises-conflict-of-interest-concerns/



tobacco industry lobbyists as candidates for the 2014 election. One, the former Corporate

Affairs Manager for Philip Morris, won a safe seat. The other, who previously held the same

job, was elected on the party list.118

It could be argued that National took advantage of threats that were intended to chill, as a

justification for delaying a policy that was unpopular with parts of its core constituency and

which it had endorsed as the price of forming a coalition government. But that is too simplistic.

In 2008, 2011 and 2014 National maintained an unlikely alliance with the Māori Party, which

was formed in 2004 in opposition to Labour government legislation that denied Māori rights

to claim ownership of the foreshore and seabed. The party’s co-leader Tariana Turia held the

portfolio of Associate Minister of Health from 2008 to 2014. The Māori Party spearheaded the

Select Committee inquiry that reported in November 2010 and led to the Smoke-free 2025

goals announced in March 2011. The confidence and supply arrangement in 2011 included a

commitment to tobacco reform, including work on plain packaging. Turia drove the smoke-

free policy with the same determination as Australia’s Health Minister at the time, Nicola

Roxon, and deserves considerable credit for diminishing the ‘chilling effect’. But she lacked

power within a reluctant government to advance the legislation. Turia retired in 2014 and the

party only secured two seats in that year’s election. National no longer needed them to govern

and their leverage over tobacco control and other policies fell accordingly.

Over the same period National had a coalition arrangement with the libertarian ACT Party,

which champions regulatory minimalism, protection of private property rights and individual

choice. ACT held the portfolio of Regulatory Responsibility and was responsible for the

Cabinet statement, ‘Better Regulation, Less Regulation’, issued in 2010.119 Despite that

position, ACT lacked the influence to stop the government from pursuing a contrary policy. Its

only MP, David Seymour, ‘proudly opposed’ the plain packaging Bill at the second reading in

2016, declaring it a ‘major step in eroding our tradition of property rights and freedom to

trade’.120

This contrast suggests that the political context of coalition politics impacted on the industry’s

moves to chill the policies, but was not determinative of the government’s decision to bring

the law into force in March 2018. That was both a legislative imperative, and necessary to

avoid the reputational harm associated with inaction when Australia had been so proactive.

D Tobacco Control Advocates

The other potentially neutralising agents were the tobacco control community. As noted earlier,

they mobilised to generate submissions and actively engaged throughout the prolonged policy

process. Health advocates and academics were personally targeted by Carrick Graham and

others on behalf of their un-named clients. University of Otago alcohol researcher Doug

Sellman observed:

118 Editorial, ‘Tobacco Stain on Would-Be MP’, Dominion Post (online), 1 May 2014,

<http://www.stuff.co.nz/dominion-post/comment/editorials/9996252/Editorial-Tobacco-stain-on-would-be-

MP>. 119 Minister of Finance and Minister of Regulatory Responsibility, ‘Government Statement on Regulation:

Better Regulation, Less Regulation’ (Government Statement, 17 August 2009)

<http://www.treasury.govt.nz/regulation/informationreleases/statement>. 120 Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill 2016, Second Reading (30 June

2016) 51 NZPD 2111 (David Seymour) <https://www.parliament.nz/en/pb/hansard-

debates/rhr/combined/HansDeb_20160630_20160630_20>.

http://www.stuff.co.nz/dominion-post/comment/editorials/9996252/Editorial-Tobacco-stain-on-would-be-MP

http://www.stuff.co.nz/dominion-post/comment/editorials/9996252/Editorial-Tobacco-stain-on-would-be-MP

https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20160630_20160630_20

https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20160630_20160630_20



I think it’s had a chilling effect on public health practitioners and scientists who speak out on

issues that might upset big business, like Carrick Graham’s clients, and current government

policy. ... I’m most concerned about the way [this] might put off bright, enthusiastic young

health practitioners and scientists from getting involved in alcohol [reform] advocacy. …The

most important thing is the public comes to understand that personal attacks on health

professionals who speak out against vested interests are a deliberate tactic of these people to

maintain their power and fortunes.121

The government was complicit in muzzling the health community. In 2014 the Ministry of

Health launched a review of the effectiveness and value for money of tobacco control.122 The

budget for the tobacco control programme in 2014–2015 was $61.7 million. The review saw

$21 million in contracts re-tendered.123 Other projects were being re-evaluated. Those who lost

their funding included the major advocacy groups: the Smokefree Coalition of 56 groups who

had been catalysts for the Smokefree Aotearoa agenda over 20 years, the New Zealand arm of

Action on Smoking and Health New Zealand, Smokefree Nurses, and various Māori and iwi

(tribal) providers.124 The decision to refocus the available public funding for tobacco control

away from advocacy towards treatment diluted the political risk of delays in the introduction

of plain packaging and the capacity for those groups to campaign actively against the TPPA

and similar negotiations.

VI REGULATORY CONSTRAINTS

The industry’s strategy achieved delay, but not abandonment of the plain packaging legislation.

To achieve even that degree of specific chill requires access as well as influence. Contemporary

regulatory management systems offer structured opportunities for influence; they are also an

important element of systemic chill.

A The Regulatory Management Regime

The New Zealand and Australian governments are both strong proponents of a neoliberal

notion of ‘best practice’ regulation that prescribes the presumptions, criteria and processes that

policy makers must apply.125 A bias towards minimising intrusion on commercial interests has

become institutionalised through a process of regulatory impact analysis and the publication of

exposure drafts of legislation and regulations for consultation with stakeholders.

As with many approaches to governance since the 1980s, the regulatory management regime

has a stronger ideological bent in New Zealand than Australia. Health policy makers have to

121 Newport, above n 115. 122 See SHORE and Whariki Research Centre, ‘Review of Tobacco Control Services Report’, (Report, 27, 2014)

<https://www.health.govt.nz/system/files/documents/publications/review-of-tobacco-control-services-

nov14.pdf>. 123 Cabinet Social Policy Committee, Parliament of New Zealand, Report Back on New Zealand’s Tobacco

Control Programme (2016). 124 The nurses’ union launched a petition to secure part of increased tobacco tax for full funding for smoking

cessation and advocacy services: New Zealand Nurses Organisation, ‘Nurses Launch Smokefree Funding

Petition’, (Media Release, 4 August 2016) <http://www.scoop.co.nz/stories/PO1608/S00053/nurses-launch-

smokefree-funding-petition.htm>. 125 Jane Kelsey, ‘The Emperor Has No Clothes: Long Live the Emperor’ in Susan Schroeder and Lynne Chester

(eds), Challenging the Orthodoxy: Reflections on Frank Stilwell’s Contribution to Political Economy (Springer,

2013) 151, 159–64; for a sympathetic comparison of the Australian and New Zealand approaches see: Peter

Carroll, ‘Ex Ante Evaluation in Australia and New Zealand: The Case of Regulatory Impact Assessment’,

(University of Tasmania, 2014) <http://reggov2014.ibei.org/bcn-14-papers/41-19.pdf>.

http://www.scoop.co.nz/stories/PO1608/S00053/nurses-launch-smokefree-funding-petition.htm

http://www.scoop.co.nz/stories/PO1608/S00053/nurses-launch-smokefree-funding-petition.htm

http://reggov2014.ibei.org/bcn-14-papers/41-19.pdf



comply with a ‘Better Regulation, Less Regulation’ directive, a Code of Good Regulatory

Practice, a Best Practice Model from the Treasury, and other strictures that favour no, self- or

co-regulation, and relegate directive forms of regulation (such as plain packaging) to the least

desirable end of the spectrum.126 There is an inbuilt role for MFAT to assess a proposal in light

of New Zealand’s trade and investment agreements. The more numerous and broad-ranging

their scope, the greater MFAT’s influence over policies and regulations that are the core

business of other ministries. Their advice came to dominate the later Cabinet papers on

implementing the plain packaging law.

Specific and systemic forms of regulatory chill converged in this process. Consultations on

draft legislation and regulations gave the tobacco industry new opportunities to challenge the

rationale and evidence base for plain packaging laws, in addition to making parliamentary

submissions. The industry targeted New Zealand’s processes from an early stage. In 2011,

Philip Morris (New Zealand) told the Associate Minister of Health that ‘plain packaging

breaches the government’s own regulatory principles’.127 Because New Zealand’s plain

packaging legislation largely copied Australia’s, the industry also cited the internal

disagreements between government agencies and criticisms of Australia’s regulatory impact

analyses from IP Australia and the Office of Best Regulatory Practice (located in the

Department of Finance and Deregulation) in their various interventions.128

The regulatory process had another less obvious, but arguably more significant, value to the

industry. Australian tobacco companies built an extensive compendium of documents through

these consultation processes, complemented by official information requests, which provided

evidence to support the WTO and investment disputes.129 New Zealand’s Ministry of Health

and MFAT were presumably aware of this, introducing a potential chilling factor into the

engagement between ministries.

B The Consultation Document and Regulatory Impact Statement 2012

The industry used the consultations on the Bill and the Regulations to reiterate its arguments

and repeat its threats, and to orchestrate an apparent groundswell of opposition. The

consultation paper on the Bill was released in 2012 with the Regulatory Impact Statement (RIS)

and exposure draft of the legislation.130 It stated four purposes: alignment of New Zealand’s

requirements with those applying in Australia; effectiveness, with a preference for the strongest

form of standardisation unless there is good reason otherwise; to inform New Zealand’s trade

partners and invite their comments; and practicality, with a preference for simplicity.131

While the process also provided a forum for health policy advocates, the consultation paper

largely required them to respond to the industry’s arguments. The 20 questions it posed were

informed by the industry’s standard complaints about plain packaging, and almost none were

about health.132 Some were adaptations of the template for such documents, for example:

126 Kelsey, above n 27, 141–9. 127 Letter from Brett Taylor, General Manager, Philip Morris (NZ) Ltd to Hon Tariana Turia, Associate Minister

of Health, 11 July 2011 <https://www.health.govt.nz/system/files/documents/pages/correspondence-philip-

morris-nz-ltd-to-hon-tariana-turia-plain-packaging-cigarettes-july-2011.pdf>. 128 Ibid. 129 Kelsey, ‘A Gold-Plated Gift to the Tobacco Industry’, above n 23, 255–62. 130 Consultation on Plain Packaging Proposal, above n 3. 131 Consultation Document on Regulations, above n 52, 5. 132 The questions are set out in Submissions Analysis, above n 41, app B.



If you do not agree that plain packaging should be introduced, are there other

options that you think should be adopted to address the issues above; …

If adopted, do you think plain packaging of tobacco products might have any

unintended or undesirable consequences, such as …

What are the likely impacts that plain packaging would have for manufacturers,

exporters, importers and retailers of tobacco products.

Other questions were very specific, addressing the black market for tobacco, increased costs to

businesses, and time taken to serve customers. Despite setting the agenda, the industry

complained that the questions were biased against it.

Their proposed alternatives foreshadowed the main argument that was likely to be used in

WTO committees and litigation: that there were effective and less burdensome options for

achieving the policy objectives, such as continuing the status quo, further education, additional

excise tax, and increased personal responsibility.133 The strongest (identical) remark supporting

the status quo came from two international manufacturers:

We urge the New Zealand Government to develop a rational and appropriate framework within

which legitimate consumer demand for tobacco products is met and real public health goals

achieved, rather than continuing to pursue an irrational approach that achieves no public health

benefit.134

The consultation document invited comments on the RIS itself. The 15 submitters who

expressed concerns were either individuals who did not support the policy or retailers and

participants in the domestic or international tobacco industry.135 Their objections included: a

flawed evidence base; insufficiently robust research methodologies; lack of New Zealand

specific data; no impartial, independent and thorough assessment of evidence; under-statement

of the problems; over-exaggeration of the benefits; and failure to give enough weight to other

policy options. BATNZ complained that the RIS made no attempt to quantify New Zealand’s

exposure to awards of compensation136 (although the paper conservatively assessed the

government’s costs for an investment arbitration at NZ$3–6 million and under NZ$2 million

for a WTO dispute).137 A combination of three manufacturer / exporter / importers, one

international manufacturer, one retailer, and three individuals deemed the RIS not fit for

purpose. The summary of government’s failure to ‘meet the key principles for good regulation’

reads like a (somewhat incoherent) complaint to an investment tribunal or WTO committee:

proportionality (the RIS does not take into account the costs and benefits of the

proposed regulatory measures)

certainty (the tobacco industry and retailers are in an unpredictable position as the

details of plain packaging requirements will not be available until after the legislation

has [been] enacted)

flexibility (the Ministry has not provided adequate analysis on the impacts and costs)

durability (once implemented it will be hard to respond to unforeseen consequences)

133 Ibid 56. 134 Ibid 57. 135 Ibid 64–5. 136 British American Tobacco (NZ) above n 69, 70. 137 Ministry of Health (NZ), Regulatory Impact Statement: Plain Packaging of Tobacco Products (2012), 12.



transparency and accountability (the Ministry will not engage in a transparent and

accountable manner and the proposal contains no performance targets or mechanisms

by which to assess the effectiveness of the proposal)

capable regulators (the Ministry lacks institutional capacity to monitor the proposal)

growth supporting (plain packaging is likely to have a severe impact on growth).138

C Parliamentary Submissions

Attacks on the process continued in the Select Committee hearing on the Bill. Imperial

Tobacco’s submission claimed that the ‘flawed’ regulatory impact assessment ‘demonstrably

failed to meet the government’s own standards’.139 Gietz told the Select Committee the

company wanted to engage constructively with government to achieve ‘quality regulatory

decisions’ based on ‘sound, evidence-based, reasonable and practicable regulation of tobacco

products’.140 Katherine Rich’s talking points to the Select Committee on behalf of the Food

and Grocery Council insisted that:

[g]ood regulatory practice must not be abandoned for a government’s position on what it

believes to be the public good. All legislation must be reasonable, robust, and justified.

Without such criteria being rigorously applied, there is no framework to manage the whims

and fancies of any well-meaning enthusiast [and that] delays do not change the basis for

regulation from bad practice to good practice.141

D Supra-national Regulatory Disciplines

The same ideological presumptions and practices are increasingly written into contemporary

free trade and investment agreements that bind the government when making domestic

regulatory decisions. The most familiar in the tobacco policy arena are the rules on Technical

Barriers to Trade in the WTO and many FTAs.142 These rules apply to labelling and product

standards, and require the government to adopt the least trade restrictive measures that could

achieve its health policy objectives, using narrow criteria that must be supported by evidence.

New regulations must be notified to and can be reviewed by the TBT committee, under the

spectre of a formal dispute. The WTO’s TRIPS agreement and intellectual property chapters

of FTAs have their own rules, criteria, review and dispute processes. More recently, the TPPA

sought to mandate the use of regulatory impact assessments as ‘best practice’ and apply the

presumption of light-touch regulation across the board, although the final text of its Regulatory

Coherence chapter was diluted and unenforceable.143

A complementary trend in recent agreements requires governments to consult on measures that

could affect their obligations under an agreement. For example, transparency obligations are

no longer just requirements to make existing laws, regulations and procedures publicly

available. Chapters on ‘transparency’ may require prior consultation with other states and

‘interested persons’, the consideration of their views, and sometimes explanations for why

these were not accepted.144 These stand-alone chapters are often reinforced by parallel

138 Submissions Analysis, above n 41, 67. 139 Imperial Tobacco Submission 2014, above n 71. 140 Ibid 6. 141 NZFGC Introductory Statement, above n 72. 142 See WTO Agreement on Technical Barriers to Trade, opened for signature on 15 April 1994, 1868 UNTS 120

(entered into force 1 January 1995) art 2.2. 143 See Kelsey, above n 22, 246–50. 144 For example, TPPA, art 26.2.2.



requirements in particular chapters, and compliance is overseen by sectoral sub-committees of

the parties. Although the TPPA is defunct in its original form, similar proposals have been

promoted in negotiations for other agreements.145

Many of these international obligations were not in play during New Zealand’s policy process

for plain packaging. However, New Zealand’s trade officials have been their strongest

proponents, reflecting the strong ideological synergy between the international agreements and

the domestic regulatory regime into the future.

VII CONCLUDING THOUGHTS

This paper tested the working hypothesis that three inter-related elements combined to chill an

already reluctant New Zealand government on the plain packaging law: perceived risks

associated with trade and investment obligations; arguments of highly influential industry

lobbyists; and a bias in the regulatory management regime that favours minimal intervention,

consistent with the international trade and investment agreements.

Six years from the first tentative policy announcement, New Zealand’s plain packaging

legislation had been passed but was not in force. There is no doubt that the threat of litigation

under New Zealand’s trade and investment agreements played a significant role in this delay.

The tobacco industry and its allies used every available opportunity to wield their considerable

influence. Even with redactions, it is clear from official documents that threats of trade and

investment litigation, reputational factors and flow-on effects to other export industries induced

caution throughout the process. The centrality of these arguments meant the policy advice on

plain packaging became more heavily influenced by MFAT than by the Ministry of Health.

It could be argued that the decision to proceed reflected an assessment of the legal risk in light

of Australia’s success in the investment arbitration and initial WTO hearing, and the safety in

numbers created by a growing number of countries adopting plain packaging laws. Equally,

the government had reached the point when it could delay no longer: the Act stipulated 14

March 2018 as the default date for implementation. There was no guarantee that the tobacco

industry would not bring an investment dispute or that Australia would not lose an appeal

against the WTO panel’s decision. But the alternative was to amend or repeal the plain

packaging legislation. Presumably, the political cost of doing so would have outweighed the

factors that had chilled the adoption of the law for six years.

That assessment is consistent with the government’s lack of commitment to the broader

Smoke-free 2025 goal. The interim smoke-free targets for 2015 and 2018 have been missed.

Smoking is still strongly delineated by ethnicity and class. Tobacco use has not fallen

significantly among those who smoke the most: Māori, Pacific, people on low incomes, and

people with mental illness.146 Two years after the government promised an action plan to

145 For example, the Transparency provisions (Article III) in the General Agreement on Trade in Services; see

Ellen Gould, Analysis of the TiSA Annex on Transparency’ (Greenpeace, 2016) <https://ttip-leaks.org/wp-

content/uploads/2016/11/Analysis-of-the-TiSA-Annex-on-Transparency.pdf>. 146 Judith McCool and Chris Bullen, ‘Making the Next Steps the Right Ones: Progress Towards the Smokefree

Aotearoa 2025 Goal’ (2016) 129 New Zealand Medical Journal 1439, 6–7; Louise Delany et al, ‘Key Design

Features of a New Smokefree Law to Help Achieve the Smokefree Aotearoa New Zealand 2025 Goal’ (2016)

129 New Zealand Medical Journal 1439, 68.



achieve the Smoke-free 2025 goal there was not even a timetable for its development.

Frustrated, tobacco-control researchers announced they would develop their own.147

This paper has argued that political leadership is crucial to achieving that goal in New Zealand,

as it has been in Australia. At present, there are no effective political champions of tobacco-

control in the governing coalition or the opposition parties. But that would still not be enough.

Outside strategies are needed to neutralise the specific and systemic elements of regulatory

chill, such as active campaigning to prevent new international agreements that constrain health

policy, including tobacco control; rallying the health community to challenge the subordination

of health policy to international trade and investment rules; strengthening the backbone of the

Ministry of Health to contest the dominance of MFAT; and conducting alternative impact

assessments of proposed agreements to expose the negative consequences.148 Given the

government’s deliberate gutting of the tobacco-control advocacy groups, responsibility to

develop and implement those strategies will fall largely to academics and the broader public

health community. Unless that is done, the inertia that has been instilled into policy-making on

Smokefree Aotearoa 2025 will continue to infect tobacco control strategies and comparable

public health objectives for alcohol and high-sugar foods, as well as other socially progressive

policies.

147 ‘Researchers to Propose New Smokefree 2025 Action Plan in Light of Government No Show’, Scoop (online),

30 May 2017 <http://www.scoop.co.nz/stories/PO1705/S00473/researchers-to-propose-new-smokefree-2025-

action-plan.htm>; see also McCool and Bullen, above n 147; Delany et al, above n 147. 148 See eg, Katie Hirono et al, ‘Negotiating Healthy Trade in Australia: Health Impact Assessment of the Proposed

Trans-Pacific Partnership Agreement’ (Centre for Health Equity Training Research and Evaluation, 2015).

http://www.scoop.co.nz/stories/PO1705/S00473/researchers-to-propose-new-smokefree-2025-action-plan.htm

http://www.scoop.co.nz/stories/PO1705/S00473/researchers-to-propose-new-smokefree-2025-action-plan.htm





PROPERTY AND PROPORTIONALITY:

EVALUATING IRELAND’S TOBACCO

PACKAGING LEGISLATION

EOIN O’DELL*

This article evaluates the constitutionality of the restrictions upon tobacco packaging in Ireland

in the Public Health (Standardised Packaging of Tobacco) Act 2015 and Part 5 of the Health

(Miscellaneous Provisions) Act 2017. Australia is the only country to have commenced this

legislative process earlier, so the Irish experience (and, in particular, an analysis of the

constitutionality of the Irish legislation) could provide a roadmap for other jurisdictions aiming

to implement similar restrictions. This article concludes that public health and the protection of

children constitute pressing and substantial reasons sufficient to justify as proportionate these

Acts’ restrictions upon tobacco companies’ property rights protected by the Irish Constitution.

I INTRODUCTION

On 10 March 2015, Ireland became the second country in the world — after Australia — to enact

legislation requiring standardised tobacco packaging; and, after amendment, it came fully into

force on 29 September 2017.1 The legislative regime prohibits all forms of branding (including

trade marks) from appearing on tobacco packaging, except for brand names which will have to be

presented in a standard typeface on packages, which must all be in the prescribed colour.

Although early Irish tobacco legislation mainly covered excise matters, 2 tobacco is now

increasingly being regulated for public health reasons, and the current packaging legislation is

simply the most recent example in a long line of tobacco control legislation. Hence, the regulation

of tobacco advertising in Ireland began in 1978;3 the regulation of the sale of tobacco products

began in earnest in 1988;4 and a comprehensive system to regulate the sale and consumption of

tobacco products — including the world’s first outright ban on smoking in the workplace — was

* BCL (NUI), BCL (Oxon), MA (j o) (Dubl), LLM (a e Oxon) (Dubl), PhD (Cantab), Barrister (Kings Inns). Fellow

and Associate Professor, School of Law, Trinity College Dublin. I would like to thank Mark Bell, David Kenny,

Caoimhín Mac Maoláin, Deirdre Ní Fhloinn, Rachael Walsh, and Gerry Whyte for their help with this article. 1 On 10 March 2015, the President signed the Public Health (Standardised Packaging of Tobacco) Act 2015. On 16

February 2017, the President signed the Health (Miscellaneous Provisions) Act 2017, Part 5 of which amends the 2015

Act. Those parts of the 2015 Act which were not to be amended by the Bill which became the 2017 Act were brought

into force on 20 May 2016 by the Public Health (Standardised Packaging of Tobacco) Act 2015 (Commencement)

Order 2016 (SI No 270 of 2016); and the remaining parts of the 2015 Act, as amended by the 2017 Act, were brought

into force on 29 September 2017 by the Public Health (Standardised Packaging of Tobacco) Act 2015

(Commencement) Order 2017 (SI No 115 of 2017). References hereafter simply to the Irish packaging legislation are

to the primary and secondary legislation in this footnote. 2 Tobacco Act 1934; Finance (Excise Duty on Tobacco Products) Act 1977. 3 Tobacco Products (Control of Advertising, Sponsorship and Sales Promotion) Act 1978. 4 Tobacco (Health Promotion and Protection) Act 1988.




introduced by the Public Health (Tobacco) Act 2002.5 That Act is the foundation for the current

system of tobacco control in Ireland.6 It was amended in 2004,7 to implement two European

Directives,8 and to give effect to the World Health Organization’s Framework Convention on

Tobacco Control 2003,9 and has recently been amended to prohibit smoking in cars in which

children are present.10 The Public Health (Standardised Packaging of Tobacco) Act 2015 (‘2015

Act’) implemented another European Directive;11 and that Act, as amended by Part 5 of the Health

(Miscellaneous Provisions) Act 2017 (‘2017 Act’), now requires standardised packaging of

tobacco products.

The ink was barely dry on the President’s signature on the 2015 Act when the tobacco industry

sought declarations that it was contrary to EU law. A reference to the Court of Justice of the

European Union was refused,12 and the case subsequently settled.13 When the Bill that became the

2015 Act was being considered by parliamentary committee,14 the probability of a constitutional15

challenge was a theme of submissions, not only from the tobacco industry,16 but also from the Law

5 The workplace ban was introduced by s 47 of the 2002 Act, and the Tobacco Smoking (Prohibition) Regulations

2003 (SI No 481 of 2003). 6 As amended, inter alia, by the Public Health (Tobacco) (Amendment) Act 2009, the Public Health (Tobacco)

(Amendment) Act 2010, the Public Health (Tobacco) (Amendment) Act 2011, and the Public Health (Tobacco)

(Amendment) Act 2013. 7 By the Public Health (Tobacco) (Amendment) Act 2004. 8 Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the Approximation of the

Laws, Regulations and Administrative Provisions of the Member States Concerning the Manufacture, Presentation

and Sale Of Tobacco Products [2001] OJ L 194/26; and Directive 2003/33/EC of the European Parliament and of the

Council of 26 May 2003 on the Approximation of the Laws, Regulations and Administrative Provisions of the Member

States Relating to the Advertising and Sponsorship of Tobacco Products [2003] OJ L 152/16. 9 World Health Organization Framework Convention on Tobacco Control, signed 21 May 2003 (2302 UNTS 166,

entered into force 27 February 2005). Ireland signed the Convention on 16 September 2003 and, by virtue of the 2004

Act, ratified it on 7 November 2005. 10 Protection of Children’s Health (Tobacco Smoke in Mechanically Propelled Vehicles) Act 2014. 11 Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the Approximation of the

Laws, Regulations and Administrative Provisions of the Member States Concerning the Manufacture, Presentation

and Sale of Tobacco and Related Products [2014] OJ L 127/1. It repealed and replaced Directive 2001/37/EC above

n 8, and is in part directed to implementing the Framework Convention on Tobacco Control. It is given further effect

in Irish law by the European Union (Manufacture, Presentation and Sale of Tobacco and Related Products)

Regulations 2016 (SI No 271 of 2016). 12 In JTI Ireland Ltd v Minster for Health [2015] IEHC 481 (07 July 2015) Cregan J refused to make the reference, in

part because the same questions had already been referred from the UK in R (Philip Morris Brands Sàrl) v Secretary

of State for Health [2014] EWHC 3669 (Admin). The questions were answered in Case C-547/14 R (Philip Morris

Brands Sàrl) v Secretary of State for Health (ECLI:EU:C: 2016:325, CJEU, 4 May 2016). These answers were applied

in British American Tobacco v Secretary of State for Health [2016] EWHC 1169 (Admin) affd [2016] EWCA Civ

1182. 13 The case settled after a Directions Hearing on 9 November 2016. 14 Joint Committee on Health and Children, Parliament of Ireland, Public Health (Standardised Packaging of

Tobacco) Bill 2013, Seanad Debates (13 February 2014)

<http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/committeetakes/HEJ20140213000

02>. 15 Some relevant constitutional provisions are set out in the Appendix to this article. 16 Company Submissions by the Irish Tobacco Manufacturers’ Advisory Committee <http://www.itmac.ie/company-

submissions/>; see also Written Submissions on behalf of Philip Morris International <http://health.gov.ie/wp-

content/uploads/2014/07/Philip-Morris-i.pdf>.



Society of Ireland.17 In PJ Carrolls v Minister for Health and Children,18 constitutional property

rights were central to the tobacco industry’s challenge to tobacco advertising prohibitions in the

Public Health (Tobacco) Act 2002; they were central to the industry’s challenge to the Australian

legislation;19 and they would doubtless be equally central to any challenge to the Irish packaging

legislation. Such property rights challenges have failed in the High Court of Australia20 and the

Court of Justice of the European Union;21 they are likely to fail in the European Court of Human

Rights;22 and it is the conclusion of this article that they would also fail in Ireland.

Part II of this article therefore briefly describes the restrictions upon the use of trade marks and

other branding that potentially engage constitutional property rights. Part III describes the

integrated constitutional protection of property; and it considers the extent to which it is likely to

be engaged by restrictions on the tobacco companies’ use of their trade marks. Part IV considers

the pressing and substantial reasons which the state may proffer to seek to justify the restrictions

in the packaging legislation upon constitutional property rights. The state’s interests in the

promotion of public health in general, and the protection of children in particular, have been relied

upon to sustain important legislation in the past; and this Part considers the extent to which they

may be relied upon by the state in this context. Part V considers the extent to which the restrictions

thereby justified satisfy the proportionality and rationality standards of review or scrutiny.

Part VI concludes that, if the restrictions on constitutional property rights in the 2015 Act and in

Part 5 of the 2017 Act are challenged by the tobacco companies, the courts will almost certainly

find that those Acts are constitutionally valid.

II RESTRICTIONS

The restrictions prescribed by the Irish packaging legislation are extensive and broadly of three

kinds. In general, many elements of tobacco packaging are prohibited, others are regulated, and

still others are required. These three strategies affect the tobacco companies’ intellectual property

rights. For example, branding and trade marks on wrappers23 are prohibited; the appearance of

17 Submission of the Intellectual Property Law Committee of the Law Society of Ireland

<https://www.lawsociety.ie/Documents/committees/IP/PlainPackagingSubmissionFeb13.pdf>. 18 [2003] IEHC 613 (17 January 2003) (Kelly J) (discovery motions); [2004] IEHC 310 (Kelly J) (inadmissibility of

expert evidence) revsd [2005] IESC 26 (evidence admissible; courts do not interpret statutes in a vacuum). The case

settled on 5 February 2003. 19 JT International SA v Commonwealth of Australia (2012) 250 CLR 1. 20 Ibid. See also Tania Voon, ‘Acquisition of Intellectual Property Rights: Australia’s Plain Tobacco Packaging

Dispute’ (2013) 2 European Intellectual Property Review 113; Matthew Rimmer, ‘The High Court of Australia and

the Marlboro Man: the Battle over the Plain Packaging of Tobacco Products’ in Tania Voon, Andrew Mitchell, and

Jonathan Liberman (eds), Regulating Tobacco, Alcohol and Unhealthy Foods: The Legal Issues (Routledge, 2014)

337; Mark Davison, ‘Tobacco Control in Australia: The High Court Challenge to Plain Packaging’ in Andrew Mitchell

and Tania Voon (eds), The Global Tobacco Epidemic and the Law (Edward Elgar, 2014) 258. See generally Simon

Chapman and Becky Freeman, Removing the Emperor’s Clothes: Australia and Tobacco Plain Packaging (Sydney

University Press, 2014). 21 See above n 12. 22 See Jonathan Griffiths, ‘On the Back of a Cigarette Packet — Standardised Packaging Legislation and the Tobacco

Industry’s Fundamental Right to (Intellectual) Property’ (2015) Intellectual Property Quarterly 343. 23 2015 Act ss 7(8)(b)–(e), 9(8)(b)–(e), 10(7)(b)–(e).



branding24 and the location of brand-names25 are regulated; and the shape of packets,26 and the

colours of all parts of packaging27 not taken up by the health warnings and images that have long

been mandatory28 must be as required. Moreover, the Minister has power to make orders 29

prescribing the details of standardised packaging for every brand on the market. Furthermore,

tobacco packaging shall ‘not bear a mark or trade mark’ except as permitted pursuant to the 2015

Act. The general powers relating to the regulation of packaging, and the specific rules relating to

trade marks, will certainly control the use of trade marks upon — and potentially even effectively

ban trade marks from — tobacco packaging.

In all of these ways, therefore, the tobacco companies’ intellectual property rights are plainly

affected by the restrictions in the Irish packaging legislation. The question therefore arises whether

their constitutionally protected property rights are thereby engaged.

III RIGHTS

The tobacco companies’ property30 rights are potentially engaged by these restrictions for two

reasons. First, there are restrictions on what tobacco companies can do with the packets of their

products. Second, their intellectual property rights are affected; in particular, their trade marks are

banned on wrappers and restricted and potentially prohibited on packaging.

A Two Articles

In Ireland, two articles of the Constitution are concerned with the protection of property: article

40.3.2 and article 43. This bifurcated protection reflects an uneasy drafting compromise. 31

Although their interpretation and inter-relationship has not been free from difficulty in the past,32

24 Ibid ss 7(3)–(4), 7(10)–(11), 9(3)–(4), 9(10)–(11), 10(3)–(4), 10(9)–(10). 25 Ibid ss 7(3)–(4), 9(3)–(4), 10(3)–(4), as extended by 2017 Act ss 13–15. 26 Ibid ss 7(6), 9(6). 27 Ibid ss 7(1)(a)–(b), 9(1)(a)–(b), 10(1)(a)–(b). 28 Ibid ss 7(4), 9(4), 10(4). The first power to require health warnings was contained in Tobacco Products (Control of

Advertising, Sponsorship and Sales Promotion) Act 1978 s 2(f), implemented by the Tobacco Products (Control of

Advertising, Sponsorship and Sales Promotion) Regulations 1979 (SI No 350 of 1979). See now Part 3 of the

European Union (Manufacture, Presentation and Sale of Tobacco and Related Products) Regulations 2016 (SI No

271 of 2016), implementing the 2015 Act and Directive 2014/40/EU, above n 11. To the extent that the Directive is

valid, the statutory instrument implementing it is immune from constitutional challenge, as a measure ‘necessitated

by the obligations of membership’ of the EU (Constitution, art 29.4.6; Quinn v Ireland (No 2) [2007] 3 IR 395).

Consequently, the regulations relating to health warnings are not considered further in this article. 29 2015 Act ss 7(10)–(11), 9(10)–(11), 10(9)–(10). 30 The experience in the US and Canada suggests that speech rights are also potentially engaged, and the issue arose

in PJ Carrolls v Minister for Health and Children [2005] IESC 26. However, they are left aside in this article, as the

issue is comprehensively covered in Eoin O’Dell, ‘Is Standardised Tobacco Packaging a Proportionate Restriction on

Constitutional Speech Rights?’ (paper delivered at the ICON-S British and Irish Chapter Inaugural Conference, Trinity

College Dublin, Ireland, 5 September 2017). 31 Rachael Walsh, ‘Private Property Rights in the Drafting of the Irish Constitution: A Communitarian Compromise’

(2011) 33 Dublin University Law Journal 86. 32 See eg, Re Article 26 and the Planning and Development Bill, 1999 [2000] 2 IR 321, 347, [76] (Keane CJ, for the

Court); Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105, 197, [113] (Hamilton CJ, for the

Court); Reid v Industrial Development Agency [2015] IESC 82, [41]–[42] (McKechnie J; Denham CJ, O’Donnell,

Laffoy and Charleton JJ concurring).



it is not in doubt that they ‘mutually inform each other’,33 and it is increasingly clear that they now

work together as part of an integrated constitutional protection of property which pays appropriate

attention to the literal text of the articles, but shows equal concern for their structure and

interoperation.

On the one hand, Article 43 is directed to the state. The first half of the article is a muscular

assertion of the institution of private property: by it, the state acknowledges ‘the right to the private

ownership’ and guarantees ‘to pass no law attempting to abolish’ that right.34 However, the second

half of the article provides the state with a relatively wide scope for manoeuvre in restricting the

exercise of property rights: it authorises35 the state to regulate the exercise of property rights on

the basis of ‘the principles of social justice’ and to delimit their exercise on the basis of ‘the

exigencies of the common good’. On the other hand, Article 40.3.2 is directed to citizens. It

provides that the state shall ‘by its laws protect as best it may from unjust attack and, in the case

of injustice done, vindicate the … property rights of every citizen’.

Hence, both articles 43.1 and 40.3 protect property 36 as part of an integrated constitutional

protection of property; and there is, in particular, a close relationship between article 43.2 and

article 40.3.2 on the question of when restrictions are justified. In such cases, three questions

usually arise.37 First, the courts examine the nature of the property rights at issue to determine if

the integrated constitutional protection of property in articles 43 and 40.3 are engaged by the

restriction. Second, if they are, then, pursuant to article 43.2, the courts examine whether the

restriction is prima facie justifiable on the basis of social justice or the common good,38 and they

afford the state a wide latitude in regulating on those bases. Third, if such a prima facie justification

is made out, then the courts ensure that the state has not carried the restriction too far, by reviewing

or scrutinising, pursuant to article 40.3, whether the restriction constitutes an unjust (usually, a

disproportionate) attack on the engaged property rights.39

B Integrated Constitutional Protection of Property

The first case in which the integrated constitutional protection of property in articles 43 and 40.3

was relied upon successfully was Buckley v Attorney General.40 Here, the Supreme Court struck

33 Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105, 197 [113] (Murray CJ, for the Court);

J&J Haire v Minister for Health [2010] 2 IR 615, 644 [90] (McMahon J). 34 Blake and Madigan v Attorney General [1982] IR 117, 135 (O’Higgins CJ, for the Court) (art 43.1 ‘prohibits the

abolition of private property as an institution’); Re Article 26 and the Employment Equality Bill 1996 [1997] 2 IR 321,

366 (Hamilton CJ, for the Court). 35 O’Callaghan v Commissioner of Public Works [1985] ILRM 364, 367 (O’Higgins CJ, for the Court). 36 Blake and Madigan v Attorney General [1982] IR 117, 135–6 (O’Higgins CJ, for the Court). 37 Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105, 201 [119] (Murray CJ, for the Court);

National Asset Loan Management Ltd v McMahon [2014] IEHC 71, [40] (Charleton J); McGrath Limestone Works

Ltd v An Bord Pleanála [2014] IEHC 382, [10.4] (Charleton J). 38 Reid v Industrial Development Agency [2015] IESC 82, [42], [44(ii)] (McKechnie J; Denham CJ, O’Donnell, Laffoy

and Charleton JJ concurring). 39 Re Article 26 and Part 5 of the Planning and Development Bill 1999 [2000] 2 IR 321, 348–50 (Keane J, for the

Court); compare CRH plc v Competition and Consumer Protection Commission [2017] IESC 34, [67] (MacMenamin

J). 40 [1950] IR 67, striking down the Sinn Féin Funds Act 1947 because it infringed not only constitutional property

rights but also the constitutional separation of powers: see Gerard Hogan, ‘The Sinn Féin Funds Judgment Fifty Years



down an Act intended to prevent pending litigation about funds of a moribund political party, and

to divert the funds to a charitable board. In Cox v Ireland,41 the Court struck down the automatic

forfeiture of a public job and an employment-related contractually-due pension upon conviction

of an offence.42 Moreover, in Re Article 26 and the Employment Equality Bill 1996,43 the Court

struck down a provision that would have required employers to bear the costs of all special

accommodations which employees with disabilities may have needed.

On the other hand, many pieces of legislation relating to the regulation of pensions, and of markets,

trades, professions, businesses, and industries, have survived constitutional challenge. 44 For

example, the regulation of taxis has been upheld on several occasions.45 In Maher v Minister for

Agriculture, Food and Rural Development,46 the Supreme Court upheld the Irish implementation

of an EU system of quotas of milk production and levies for over-production. Moreover, in PC v

Minister for Social Protection,47 the Court held that a statutory pension that could be varied from

time to time, could not constitute a ‘property right’ within the meaning of the Irish Constitution.

C Property and Tobacco Packaging

The restrictions in the Irish packaging legislation do indeed restrict tobacco companies’ use of

their property. While they are being manufactured and until they are sold, the packets of tobacco

products are the property of the tobacco companies, and so the various restrictions on the

packaging of those products are restrictions on the companies’ use of their property. Moreover,

On’ (1997) 2 Bar Review 375; Ronan Keane, ‘The Sinn Féin Funds Case. Across the Cherokee Frontier of Irish

Constitutional Law’ in Eoin O’Dell (ed), Leading Cases of the Twentieth Century (Round Hall, 2000) 185. In Buckley

v Attorney General (No 2) (1950) 84 ILTR 9, Kingsmill Moore J held against Sinn Féin’s claim on the merits. 41 [1992] 2 IR 503, striking down section 34 of the Offences Against the State Act 1939; see Richard Humphreys,

‘Constitutional Law — Techniques of Analysis: Blacklists and Shortcuts’ (1991) 13 Dublin University Law Journal

118; see also Lovett v Minister for Education [1997] 1 ILRM 89 (HC, Kelly J) (contributory pension a constitutionally

protected property right). 42 Contrast PC v Minister for Social Protection [2017] IESC 63 (MacMenamin J; Denham CJ, and McKechnie, Clarke

and O’Malley JJ concurring) impugning regulations made pursuant to s 249(1) of the Social Welfare (Consolidation)

Act 2005, which provided for the automatic cessation of a contributory state pension upon imprisonment resulting

from conviction of an offence. The Court struck them down, not for property reasons, but because they constituted an

additional punishment not imposed by a court, contrary to the right to trial in due course of law secured by art 34 of

the Constitution: [2017] IESC 63 [59]. 43 [1997] 2 IR 321, striking down s 35 of the Employment Equality Bill 1996. 44 See Eoin O’Dell, ‘Property Rights, Proportionate Restrictions, and Media Pluralism’ (paper delivered at the

Conference on the Irish Constitution at 80: 80 Years of Constitutional Change, University of Limerick, Ireland, 11

November 2017). 45 Hempenstall v Minister for the Environment [1994] 2 IR 20 (HC, Costello J), upholding the Road Traffic (Public

Service Vehicles) (Amendment) (No 2) Regulations 1992 (SI No 172 of 1992); Gorman v Minister for the Environment

and Local Government [2001] 2 IR 414 (HC, Carney J), upholding all but one of the provisions of the Road Traffic

(Public Service Vehicles) (Amendment) (No 3) Regulations 2000 (SI No 367 of 2000) (the provision which was struck

down infringed constitutional doctrines other than property); Muldoon v Minister for the Environment and Local

Government [2015] IEHC 649 (Peart J) (same). 46 [2001] 2 IR 139, upholding the European Communities (Milk Quota) Regulations 2000 (SI No 94 of 2000). 47 [2017] IESC 63, [28] (MacMenamin J; Denham CJ, and McKechnie, Clarke and O’Malley JJ concurring). Instead,

the court struck down regulations made pursuant to s 249(1) of the Social Welfare (Consolidation) Act 2005, which

provided for the automatic cessation of a contributory state pension upon imprisonment resulting from conviction of

an offence, because that constituted an additional punishment not imposed by a court, contrary to the right to trial in

due course of law secured by art 34 of the Constitution (at [59]).



the provisions regulating packaging permit the Minister to make orders to require standardised

packaging, which will not be allowed to bear a trade mark, except as permitted pursuant to the

2015 Act. 48 This will certainly control the use of trade marks upon tobacco packaging.

Furthermore, it seems to be the government’s intention to rely on these powers to go further and

ensure ‘that all forms of branding — trade marks, logos, colours and graphics — would be

removed from tobacco packs’.49 Indeed, the matters prohibited on wrappers include trade marks.50

If a trade mark is a form of property, then a control or prohibition on the use of trade marks would

be a restriction on the companies’ use of their property.

However, at least three hurdles must be jumped before it can be concluded safely that these

restrictions engage the integrated constitutional protection of property.51 First, no relevant property

right may be engaged, either because none arises on the facts,52 or because the particular interest

relied upon by the plaintiff does not possess sufficient characteristics of ‘proprietorship and

dominion’53 to count as property for the purposes of the constitutional protection of property. Since

the scope of that protection is remarkably capacious,54 the interest relied upon would have to be

uncommonly precarious for it not to count. Even so, there is a line between property rights that are

constitutionally protected and other interests that are not. On the former side of the line lie real

property,55 personal property,56 money,57 shares,58 the benefit of contractual rights,59 causes of

48 2015 Act, ss 7(1)(c), 9(1)(c), 10(1)(c), but see s 5(1). 49 Ireland, Seanad Debates, ‘Public Health (Standardised Packaging of Tobacco) Bill 2014: Second Stage’ Seanad, 17

June 2014 (Deputy James Reilly, Minister for Health) [emphasis added]

<http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/seanad2014061700039?open

document#PP00100/>. 50 2015 Act, ss 7(8)(d), 9(8)(d), 10(7)(d), but see s 5(1). 51 Irish law does not require that the state have acquired the property, which was a hurdle that the tobacco companies

were unable to jump in JT International v Cth of Australia (2012) 250 CLR 1, [41]–[44] (French CJ), [101], [144]–

[147] (Gummow J), [164], [181], [180]–[190] (Hayne and Bell JJ), [294]–[296] (Crennan J) [341]–[344], [353]–[372]

(Kiefel J); contrast [216]–[219], [225]–[231]) (Heydon J, dissenting)). 52 For example, where there is no diminution in the value of property, there may be no attack on property rights: see

eg, Hempenstall v Minister for the Environment [1994] 2 IR 20, 28 (HC, Costello J) (regulation of taxi licence).

Indeed, some diminution in value may still not be an attack on property rights see eg, Kerry Co-Operative Creameries

Ltd v An Bord Bainne [1991] ILRM 851 (dilution of shareholding); Pine Valley Developments v Minister for the

Environment [1987] IR 23, 38 (Finlay CJ) (planning decision); Glencar Exploration plc v Mayo County Council (No

2) [2002] 1 IR 84, 128 [62] (Keane CJ). 53 Maher v Minister for Agriculture, Food and Rural Development [2001] 2 IR 139, 234 [260] (Murray J). 54 Dellway Investments v National Asset Management Agency (No 3) [2011] 4 IR 1, 287 [326] (12 April 2011)

(Hardiman J); compare JT International v Cth of Australia (2012) 250 CLR 1, [263] (Crennan J), [366] (Kiefel J). 55 See eg, Blake and Madigan v Attorney General [1982] IR 117; Re Article 26 and the Housing (Private Rented

Dwellings) Bill 1981 [1983] IR 181. 56 See eg, Attorney General v Southern Industrial Trust (1960) 94 ILTR 161 (car); Webb v Ireland [1988] IR 353,

389–90 [93] (Walsh J) (chattels). 57 See eg, Buckley v Attorney General [1950] IR 67; and see above n 40. 58 Private Motorists Provident Society v Attorney General [1983] IR 339; Kerry Co-Operative Creameries Ltd v An

Bord Bainne [1990] IRLM 664 (Costello J) affd [1991] ILRM 851. 59 East Donegal Co-Operative Livestock Mart Ltd v Attorney General [1970] IR 317, 332 (O’Keeffe P); Chestvale

Properties Ltd v Glackin [1993] 2 IR 35, 45 (Murphy J); J&J Haire v Minister for Health [2010] 2 IR 615, 647 [99]

(McMahon J); Dellway Investments v National Asset Management Agency [2011] 4 IR 1, 61–2, 67–8, [112], [125],

[2010] IEHC 364 [7.10], [7.23] (1 November 2010) (Kearns P, Kelly and Clarke JJ, in a joint judgment).



action,60 and lawful market street trading rights.61 Sitting astride the line are various pensions62

and licences.63 And, since the Supreme Court has held that milk quotas cannot be equated to a

right of property,64 they are clearly on the other side of the line.

As to the restrictions imposed by the packaging legislation, the general restrictions on packaging

restrict the tobacco companies’ use of their chattels, which plainly engage the constitutional

protection of property. As to the particular restrictions upon — and potential prohibitions on —

the tobacco companies’ use of their trade marks, it is clear that trade marks possess sufficient

characteristics of proprietorship and dominion to count as property to engage the constitutional

protection of property rights. Intellectual property rights are similar to personal property, the

benefit of contractual rights, causes of action, and street trading rights, which have all been held

to count; and although they are probably close to the line straddled by pensions and licences, they

are not on the other side of it with milk quotas. Hence, copyright has been held to constitute ‘a

right of private property within the meaning of article 40.3.2 and article 43.1 of the Constitution’.65

Similarly, in the context of the tort of passing off, a trading reputation has also been held to

constitute a property right.66 By parity of reasoning, trade marks would, in an appropriate case,

likewise be held to constitute constitutionally protected property rights.67 Indeed, the point is

potentially stronger in relation to trade marks than it is in the context of passing off. The state

registers and regulates trade marks, affording them a high level of protection; whereas unregistered

rights protected by actions like passing off may not attract as high a level of protection. Hence if

the latter are constitutionally protected property rights, so also must the former be. Indeed, in

Maher v Minister for Agriculture,68 Keane CJ came very close to holding that trade marks are

constitutionally protected property rights. In rejecting the submission that a fishing quota

60 O’Brien v Keogh [1972] IR 144, 155 (Ó Dálaigh CJ, for the Court); Re Article 26 and the Health (Amendment) (No

2) Bill 2004 [2005] 1 IR 105, 182 [86] (Murray CJ for the Court). 61 DPP (Long) v McDonald [1983] ILRM 223, 225 (Henchy J; Walsh and Griffing JJ concurring). 62 See above, nn 41 and 47. 63 On the one hand: Muldoon v The Minister for the Environment [2015] IEHC 649, [175] (Peart J) (right to property

certainly engaged in relation to the holding of a taxi licence). On the other hand: State (Pheasantry Ltd) v Donnelly

[1982] ILRM 512, 516 (Carroll J) (intoxicating liquor licence not property capable of existence separate from the

premises); Nuerendale v Dublin City Council [2009] IEHC 588 (21 December 2009) [190]–[193] (McKechnie J)

(interests generated by state regulation will not generally give rise to a property right; no property right vests in a party

‘merely by the possession of a licence’); Hand v Dublin Corporation [1991] 1 IR 409 (open question whether casual

trading licences constitutionally protected). Contrast Commonwealth v WMC Resources Ltd (1998) 194 CLR 1

(petroleum exploration licences outside scope of constitutional protection). 64 Maher v Minister for Agriculture [2001] 2 IR 139, 186 [107] (Keane CJ), 223 [217] (Denham J, Murphy J

concurring), 234 [260] (Murray J), 265 [388] (Fennelly J, concurring with Murray J). 65 Phonographic Performance (Ireland) Ltd v Cody [1998] 4 IR 504, 511, affd without reference to this point [1998]

IESC 64; EMI Records (Ireland) Ltd v Eircom Ltd [2010] 4 IR 349, 366, [28]–[29] (Charleton J); EMI Records

(Ireland) Ltd v UPC [2010] IEHC 377, [85] (Charleton J); Sony v UPC (No 1) [2015] IEHC 317 [122] (Cregan J),

affd [2016] IECA 231 [18] (Hogan J); Rónán Kennedy, ‘Was it Author’s Rights All the Time? Copyright as a

Constitutional Right in Ireland’ (2011) 33 Dublin University Law Journal 253. 66 Falcon Travel Ltd v Owners Abroad Group plc [1991] 1 IR 175, 183 (Murphy J). 67 Compare Anheuser-Busch Inc v Portugal 73049/01 (2007) 45 EHRR 36 (trade marks constitute ‘possessions’ within

the meaning of art 1 of Protocol 1 to the European Convention on Human Rights); British American Tobacco v

Secretary of State for Health [2016] EWHC 1169 (Admin) [716]–[717], [783] (Green J); affd [2016] EWCA Civ

1182, [115] (Lewison, Beatson and Richards LJJ) (same); SIA AKKA/LAA v Latvia 562/05 [2016] ECHR 631

(copyright; same); see also JT International v Cth of Australia (2012) 250 CLR 1, [105], [137] (Gummow J), [267]

(Crennan J), [192], [202]–[205] (Heydon J, dissenting). 68 [2001] 2 IR 139.



amounted to property, he did not ‘find that any assistance is to be derived from comparisons with

patents, trade marks or copyright rights which under our legal system are nowadays generically

described as “intellectual property rights”’.69 It is therefore clear that trade marks are property

rights for the purposes of the constitutional protection of property.

The second hurdle to be jumped to reach the conclusion that constitutional protection of property

is engaged by restrictions on the tobacco companies’ property and trade marks is that, whilst there

may be a relevant property right, what looks like a restriction may turn out not to be so on the

facts.70 For example, the restrictions imposed by the Irish packaging legislation upon the tobacco

companies’ use of their trade marks are likely to have a negative impact on the value of their brands

in general and of their trade marks in particular.71 However, this diminution in value may not

necessarily amount to a restriction on the tobacco companies’ property rights: ‘a change in the law

which has the effect of reducing property values cannot in itself amount to an infringement of

constitutionally protected property rights’.72 On the other hand, there remains a wide range of

restrictions on packaging and on the use of trade marks, and these restrictions will certainly engage

the integrated constitutional protection of property.

Third, there may indeed, on the facts, be a restriction on a relevant property right, but it may turn

out not to be one the plaintiffs can challenge. For example, article 40.3.2 refers to the ‘property

rights of every citizen’, and article 43.1.1 provides that ‘man, in virtue of his rational being’ has

the right to the ‘private ownership of external goods’. The emphasised words in these provisions

might well have confined the enjoyment of the constitutional protection of property to natural

persons who are citizens. Nevertheless, it is now well established that such protections may also

be enjoyed by corporate entities 73 and non-citizens. 74 Therefore a challenge by the tobacco

companies to the Irish packaging legislation would almost certainly not be excluded on this

ground.

69 [2001] 2 IR 139, 186–7 [110]. 70 BUPA Ireland v Health Insurance Authority (No 2) [2013] IEHC 103, [91]–[92] (Cooke J) (no attack on property

rights, as no compelled payments actually made); Dellway Investments v National Asset Management Agency (No 1)

[2011] 4 IR 1, [2011] IESC 4 (3 February 2011) (no attack on property rights, as no valid decision made to acquire

loans); Criminal Assets Bureau v Kelly [2012] IESC 64, [33] (MacMenamin J; Denham CJ and Hardiman J

concurring) (forfeiture of proceeds of crime ‘cannot be said to impinge on a right to private property, as the property

was acquired unlawfully’); McFeely v Official Assignee in Bankruptcy [2017] IECA 21, [29] (Peart J; Hogan and

Hedigan JJ concurring) (landlord cannot complain about search of leased premises conducted pursuant to warrant, as

any property rights engaged were those of tenant). 71 But this impact should not be overstated: see British American Tobacco v Secretary of State for Health [2016]

EWHC 1169 (Admin) [698]–[706] (Green J); affd [2016] EWCA Civ 1182. 72 Hempenstall v Minister of the Environment [1994] 2 IR 20, 28–9 (Costello P); Maher v Minister for Agriculture

[2001] 2 IR 139, 220 [202] (Denham J, Murphy J concurring); BUPA Ireland v Health Insurance Authority [2006]

IEHC 431, [242] (McKechnie J); Dellway Investments v National Asset Management Agency [2011] 4 IR 1, 64 [116],

[2010] IEHC 364 [7.14] (1 November 2010) (Kearns P, Kelly and Clarke JJ, in a joint judgment), affd Dellway

Investments v National Asset Management Agency (No 3) [2011] 4 IR 1, 325–6, [452]–[454], [2011] IESC 14, [91]–

[93] (12 April 2011) (Fennelly J); Muldoon v The Minister for the Environment [2015] IEHC 649, [164], [181]–[183]

(Peart J). 73 Iarnród Éireann v Ireland [1996] 3 IR 321, 345, [1995] 2 ILRM 161, 183 (Keane J), affd [1996] 3 IR 321; Shirley

v O’Gorman [2012] 2 IR 170, 174 [6] (Fennelly J; Denham CJ, and Murray, Macken and Finnegan JJ concurring);

see also CRH v Competition and Consumer Protection Commission [2017] IESC 34, [61]–[68] (MacMenamin J). See

generally, Ailbhe O’Neill, The Constitutional Rights of Companies (Thomson Round Hall, 2007) Part III. 74 NVH v Minister for Justice and Equality [2017] IESC 35.



IV REASONS

A Pressing and Substantial Reasons

In general, where there is a restriction upon a constitutional right, the state may advance ‘pressing

and substantial’75 reasons to seek to justify the restriction. The textual limitations on the integrated

constitutional protection of property are threefold: the state’s obligation in article 40.3.2 is to

protect ‘as best it may’ citizens’ property rights, whilst article 43 permits restrictions on the basis

of ‘the principles of social justice’76 (article 43.2.1) and ‘the exigencies of the common good’

(article 43.2.2).77 It would be unwise to overparse the similarities and differences between these

concepts,78 or the public policy underlying impugned legislation or the legitmate aim pursued by

it.79 Rather, they are simply different assertions of the same point that the state may advance

‘pressing and substantial’ reasons to seek to justify a restriction upon a right. The state can lead

expert evidence on these issues.80 Indeed, it may be fatal not to. In Re Article 26 and the Housing

(Private Rented Dwellings) Bill 1981,81 the Supreme Court struck down rent control provisions for

which no justification was provided. And so, the question here is simply whether there are

‘pressing and substantial’ reasons upon which the state may rely in seeking to justify the

restrictions upon property contained in the Irish packaging legislation. It may potentially be

justified by many reasons, but two in particular stand out: public health, and the protection of

children.

B Public Health

Public health is the main reason for the Irish packaging legislation.82 In the case of the 2015 Act,

the clue is in the name: the Public Health (Standardised Packaging of Tobacco) Act 2015. And

75 Heaney v Ireland [1996] 1 IR 580, 607 (Costello J) affd [1996] 1 IR 580. 76 Rachael Walsh, ‘“The Principles of Social Justice” and the Compulsory Acquisition of Private Property for

Redevelopment in the United States and Ireland’ (2010) 32 Dublin University Law Journal 1. 77 See in particular, Keane v An Bord Pleannála (No 3) [1998] 2 ILRM 241, 262 (Keane J; Hamilton CJ and Barrington

J concurring), construing s 26(5)(c) of Local Government (Planning and Development) Act 1963 as inserted by s 3 of

the Local Government (Planning and Development) Act 1992. 78 Contrast Donal Barrington, ‘Private Property under the Irish Constitution’ (1973) 8 Irish Jurist (ns) 1; Attorney

General v Southern Industrial Trust (1960) 94 ILTR 161, 175–6 (Lavery J). 79 Criminal Assets Bureau v Kelly [2012] IESC 64, [32] (public policy) [34](b) (legitimate aim) (MacMenamin J;

Denham CJ and Hardiman J concurring); Dellway Investments v National Asset Management Agency [2011] 4 IR 1,

118 [283], [2010] IEHC 364, [10.16] (1 November 2010) (primary policy decision for the Oireachtas) (Kearns P,

Kelly and Clarke JJ, in a joint judgment). 80 PJ Carrolls v Minister for Health and Children [2005] IESC 26. 81 [1983] IR 181, 191 (O’Higgins CJ). Similarly, in Sister Mary Christian v Dublin City Council [2012] IEHC 163

and Sister Mary Christian v Dublin City Council (No 2) [2012] IEHC 309, Clarke J struck down elements of a city

development plan for which no reasons were offered and which therefore could not be assessed for proportionality.

See also Reid v Industrial Development Agency [2015] IESC 82 (invalid reason). 82 Compare British American Tobacco v Secretary of State for Health [2016] EWHC 1169 (Admin) [60]–[76] (Green

J); affd [2016] EWCA Civ 1182, [21]–[27] (Lewison, Beatson and Richards LJJ); JT International v Cth of Australia

(2012) 250 CLR 1, [4] (French CJ), [145] (Gummow J); [253]–[254] (Crennan J), [308]–[309], [316]–[317] (Kiefel

J), but see [193], [209], [227] (Heydon J, dissenting).



public health was one of the justifications offered for the Act by the responsible Minister, Dr James

Reilly.83

In some of the Supreme Court’s most important constitutional rights cases, the state has sought to

uphold impugned legislation on the basis of public health concerns. On the one hand, in Ryan v

Attorney General,84 the Court dismissed a challenge to the fluoridation of public water supplies,

which the state successfully justified on the grounds of public health.85 And in Norris v Attorney

General,86 the Court dismissed a challenge to legislation criminalising male homosexual acts,

which the state successfully justified on the grounds, inter alia, of public health.87 On the other

hand, in McGee v Attorney General,88 the Court accepted that there ‘may be many reasons,

grounded on considerations of public health …’89 for a prohibition on the import or sale of

contraceptives, but struck it down as a disproportionate infringement of the plaintiff’s

constitutional rights. Moreover, the state may also argue that such public health concerns implicate

the state’s positive duty to vindicate the rights of its citizens. The constitution recognises an

unenumerated right to bodily integrity implied in article 40.3.1. 90 That article might, in an

appropriate case, also provide a home for a right to health.91 And the duty to vindicate these rights

could re-enforce the state’s interest in public health.92

The state’s interest in the promotion of public health was central to PJ Carrolls v Minister for

Health and Children, in which the Supreme Court held that the state could lead expert evidence of

the harmful effects of smoking to meet a challenge to tobacco advertising prohibitions in the Public

Health (Tobacco) Act 2002. For all of these reasons, therefore, the public health concerns

underpinning the Irish packaging legislation would almost certainly constitute pressing and

substantial reasons upon which the state may seek to justify standardised packaging restrictions.

83 See note 14 above; see further: Ireland, Seanad Debates ‘Public Health (Standardised Packaging of Tobacco) Bill

2014: [Seanad Bill amended by the Dàil] Report and Final Stages’, Seanad, 3 March 2015 (Deputy James Reilly,

Minister for Children and Youth Affairs)

<http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/seanad2015030300002>. 84 [1965] IR 294, upholding the Health (Fluoridation of Water Supplies) Act 1960. 85 [1965] IR 294, 348–9 [28]–[33] (Ó Dálaigh CJ, for the Court) (plaintiff had not established that fluoridation

involved any danger to life or health). 86 [1984] IR 36, upholding ss 61 and 62 of the Offences Against the Person Act 1861, and s 11 of the Criminal Law

Amendment Act 1885. The European Court of Human Rights disapproved of that outcome in Norris v Ireland 10581/83

(1988) 13 EHRR 186, and the offence was abolished by s 2 of the Criminal Law (Sexual Offences) Act 1993; see also

DPP v Devins [2012] IESC 7. 87 [1984] IR 36, 48 (McWilliam J), affd [1984] IR 36, 62, 63, 65 (O’Higgins CJ; Finlay P and Griffin J concurring),

77, 79 (Henchy J, dissenting), 94, 102, 104 (McCarthy J, dissenting). 88 [1974] IR 284, striking down s 17 of the Criminal Law Amendment Act 1935 (unconstitutional infringement of

plaintiff’s right to marital privacy). 89 [1974] IR 284, 308 (Walsh J). 90 See eg, McGee v A-G [1974] IR 284; Re a Ward of Court [1996] 2 IR 73. 91 Although the Supreme Court has so far resisted the justiciability of economic, social and cultural rights: Sinnott v

Minister for Education [2001] 2 IR 545; TD v Minister for Education [2001] 4 IR 259; there are strong arguments the

other way: see eg, Gerry Whyte, Social Inclusion and the Legal System: Public Interest Law in Ireland (Institute of

Public Administration, 2002), and the development of a justiciable constitutional right to health cannot be entirely

excluded. 92 It might also lighten the applicable standard of review; see below, Part V, E Lower and Variable Standards of

Review.



C Protection of Children

The protection of children was another of the justifications offered for the Act by the Minister,93

and it has been accepted by the European Court of Human Rights as an aim which the state may

legitimately pursue in limiting property rights.94 In Landers v Attorney General,95 Finlay J held

that the protection of children must be part of the common good. Moreover, the state may also

argue that such concerns implicate the state’s duty to vindicate children’s rights,96 which are

expressly secured by article 42A.1 of the Constitution. For these reasons, the concerns to protect

children underpinning the Irish packaging legislation would almost certainly constitute pressing

and substantial reasons upon which the state may seek to justify standardised packaging

restrictions. So too would the state’s interests in the promotion of public health. These conclusions

hold, whether those concerns or interests are described as principles of social justice, exigencies

of the common good, strong public policies, legitimate aims, or pressing and substantial reasons.

V REVIEW

It is clear that, where there is a restriction upon a right, the state may advance ‘pressing and

substantial’ reasons to seek to justify the restriction. However, it is not enough for the state to

advance such reasons; those reasons must support and justify the restrictions, and not go too far in

doing so. On this question of review or scrutiny, following the lead of the European Court of

Human Rights 97 and the Supreme Court of Canada, 98 the Irish Supreme Court has strongly

committed to a proportionality test to review or scrutinise legislative restrictions upon

constitutional rights; in particular, the impugned legislation must:

(a) be rationally connected to the objective and not be arbitrary, unfair or based on irrational

considerations;

(b) impair the right as little as possible;

(c) be such that their effects on rights are proportional to the objective.99

93 See Ireland, Seanad Debates, 17 June 2014, above n 49, 39–40; also, Joint Committee on Health and Children,

Parliament of Ireland, above n 14. 94 Vekony v Hungary 65681/13 [2015] ECHR 5. 95 Landers v Attorney General (1975) 108 ILTR 1, 5 (Finlay J) upholding s 2(b)–(c) of the Prevention of Cruelty to

Children Act 1904. 96 It might also lighten the applicable standard of review; see below, Part V, E Lower and Variable Standards of

Review. 97 Handyside v United Kingdom 5493/72 (1976) 1 EHRR 737, [49]. 98 R v Oakes [1986] 1 SCR 103, [70] (Dickson CJ; Chouinard, Lamer, Wilson and Le Dain JJ concurring). 99 Heaney v Ireland [1996] 1 IR 580, 607 (Costello J), affd [1996] 1 IR 580 (SC); Rock v Ireland [1997] 3 IR 484, 500

(Hamilton CJ, for the Court); Re National Irish Bank [1999] 1 ILRM 321, 352 [26]–[31] (Barrington J; O’Flaherty,

Murphy, Lynch and Barron JJ concurring); DK v Crowley [2002] 2 IR 744, 757–8 (Keane CJ, for the Court); Blehein

v Minister for Health and Children [2009] 1 IR 275, 281 [18] (Denham J; Hardiman, Geoghegan, Kearns and Macken

JJ concurring); Leech v Independent Newspapers (Ireland) Ltd [2014] IESC 79, [21]–[22] (McKechnie J; Dunne and

Murray JJ concurring); Meath County Council v Murray [2017] IESC 25, [21] (McKechnie J; Denham CJ, and

O'Donnell, Laffoy and Dunne JJ concurring); CRH plc v Competition and Consumer Protection Commission [2017]

IESC 34 [66]–[67] (MacMenamin J).



The Court has applied this test in the context of the integrated constitutional protection of

property.100 And it would almost101 certainly be applied in any challenge by tobacco companies to

the packaging legislation.

A Rational Connection

The first of the three steps in the Irish proportionality test is a requirement of a rational connection:

the impugned legislation must be rationally connected to the pressing and substantial reasons

advanced by the state, and not be arbitrary, unfair or based on irrational considerations. Hence, a

court ruling that restrictions were ‘impermissibly wide and indiscriminate’102 is now explained as

the application of a proportionality test.103 Similarly, a ruling that restrictions were ‘shot through

with unnecessary anomalies and inconsistencies’104 is well on course to being explained in similar

terms.105 Moreover, restrictions that are ‘arbitrary’106 or ‘discriminatory’107 have also been held

100 Re Article 26 and the Employment Equality Bill 1996 [1997] 2 IR 321, 383 (Hamilton CJ, for the Court); Re Article

26 and the Planning and Development Bill 1999 [2000] 2 IR 321, 349 [83] (Keane CJ, for the Court); Criminal Assets

Bureau v Kelly [2012] IESC 64 [34] (MacMenamin J, Denham CJ and Hardiman J concurring). See generally, Gerard

Hogan, ‘The Constitution, Property Rights, and Proportionality’ (1997) 32 Irish Jurist (ns) 373; Rachael Walsh, ‘The

Constitution, Property Rights and Proportionality: A Reappraisal’ (2009) 31 Dublin University Law Journal 1. This

is not an enquiry which much detains the Australian courts in property cases at present; however, see JT International

v Cth of Australia (2012) 250 CLR 1, [336]–[340] (Kiefel J). 101 Subject to discussion below, Part V — E Lower and Variable Standards of Review. 102 Cox v Ireland [1992] 2 IR 503, 524 (Finlay CJ, for the Court), striking down s 34 of the Offences Against the State

Act 1939. 103 Heaney v Ireland [1996] 1 IR 580, 607 (Costello J); Rock v Ireland [1997] 3 IR 484, 500 (Hamilton CJ, for the

Court); Re Article 26 and the Employment Equality Bill 1996 [1997] 2 IR 321, 342–3, 383 (Hamilton CJ, for the

Court). 104 Brennan v Attorney General [1983] ILRM 449, 469 (Barrington J), see also 486 (‘eccentric and ludicrous’); affd

[1984] ILRM 355, 365 (O’Higgins CJ, for the Court) (‘lack of uniformity, inconsistencies and anomalies’). See also

John Grace Fried Chicken Ltd v Catering Joint Labour Committee [2011] 3 IR 211, 241 [39] (Feeney J) (striking

down the Employment Regulation Order Catering Joint Labour Committee (for areas other than the areas known,

until 1st January 1994, as the County Borough of Dublin and the Borough of Dun Laoghaire) 2008 (SI No 142 of

2008) which provided for inconsistent and arbitrary rates of remuneration and conditions of employment). 105 In Shirley v O’Gorman [2006] IEHC 27 (Peart J), affd on other grounds [2012] 2 IR 170; Peart J in the High Court

treated Brennan v Attorney General [1983] ILRM 449 and proportionality as interchangeable standards, and

concluded that restrictions were ‘arbitrary, unfair and irrational and [were] therefore disproportionate’ [emphasis

added]. 106 Blake and Madigan v Attorney General [1982] IR 117, 138, 140 (O’Higgins CJ, for the Court) (‘unfair and unjust’;

‘unfair and arbitrary’; ‘arbitrary and unfair’) striking down Part II (restrictions on rent of controlled dwellings) and

Part IV (restrictions on recovery of possession of controlled premises) of the Rent Restrictions Act 1960 (as amended

by the Rent Restrictions (Amendment) Act 1967 and the Landlord and Tenant (Amendment) Act 1971). 107 Dellway Investments v National Asset Management Agency (No 3) [2011] 4 IR 1, 209, [2011] IESC 14, [53]

(Murray CJ) semble equating ‘arbitrary or discriminatory’ with ‘disproportionate’. In that case, the Supreme Court

upheld the National Asset Management Agency Act 2009 against a comprehensive challenge, but derived from the

plaintiff’s property rights certain obligations of fair procedures: see Dellway Investments v National Asset

Management Agency [2011] 4 IR 1, [2010] IEHC 364 (1 November 2010) (Kearns P, Kelly and Clarke JJ, in a joint

judgment), affd on different grounds in three judgments in the Supreme Court: Dellway Investments v National Asset

Management Agency (No 1) [2011] 4 IR 1, [2011] IESC 4 (3 February 2011) (no valid decision to acquire loans);

Dellway Investments v National Asset Management Agency (No 2) [2011] 4 IR 1, [2011] IESC 23 (12 April 2011)

(right to be heard when decision being taken); Dellway Investments v National Asset Management Agency (No 3)

[2011] 4 IR 1, [2011] IESC 14 (12 April 2011) (right to be informed of impending decision).



disproportionate. On the other hand, regulations that were ‘neither capricious nor arbitrary’108 have

been upheld easily.

The requirement of a rational connection assesses the strength or weakness of the state’s reasons

for the restriction. The less pressing and substantial they are, the less likely is it that a restriction

will be considered proportionate. For example, the state failed to provide adequate reasons to

justify an anomalous and unfair system of agricultural rates based upon land values set in 1852.109

Conversely, where the reasons are more pressing and substantial, a restriction is more likely to be

upheld as proportionate. For example, an ‘extreme financial crisis or fundamental disequilibrium

in the public finances’,110 could justify very significant restrictions indeed.

The question here, then, is whether the Irish packaging legislation passes the requirement of a

rational connection. Subject to the evidence on this point that might be run in any challenge, the

answer would almost certainly be yes. The state’s interests in the promotion of public health and

in the protection of children (discussed above) are pressing and substantial reasons; the packaging

legislation is clearly rationally connected to them; and it does not seem to be arbitrary, unfair or

based on irrational considerations.111

B Minimal Impairment

The second of the three steps in the Irish proportionality test is a requirement of minimal

impairment: the impugned legislation must impair the engaged right as little as possible. That is,

the interference must not exceed what is necessary to meet the pressing and substantial concerns

in question, and must be the least possible interference with the right consistent with the

advancement of those of those concerns.112 Hence, the imposition of ‘relatively minor’113 burdens

or ‘limited’114 intrusions upon rights, or restrictions that are not material,115 have been held to be

minimal and thus proportionate interferences with those rights.

The requirement of minimal impairment assesses the strength or weakness of a restriction upon a

right. A control upon property is less intrusive than the expropriation of the property, so control is

108 Lawlor v Minister for Agriculture [1990] 1 IR 356, 377 (HC, Murphy J) (upholding the milk quota system in

European Communities (Milk Levy) Regulations 1985 (SI No 416 of 1985); see now Maher v Minister for Agriculture

[2001] 2 IR 139. 109 Brennan v Attorney General [1984] ILRM 355, striking down s 11 of the Local Government Act 1946 which had

adopted rateable valuations determined in accordance with s 11 of the Valuation Act 1852. 110 Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105, 208 [132] (Murray CJ, for the Court);

Dellway Investments v National Asset Management Agency [2011] 4 IR 1, 120 [287], [2010] IEHC 364 [10.20] (1

November 2010) (Kearns P, Kelly and Clarke JJ, in a joint judgment). 111 Compare British American Tobacco v Secretary of State for Health [2016] EWHC 1169 (Admin) [587]–[649]

(Green J), affd [2016] EWCA Civ 1182 (Lewison, Beatson and Richards LJJ). 112 Reid v Industrial Development Agency [2015] IESC 82, [44](iv) (McKechnie J; Denham CJ, O'Donnell, Laffoy

and Charleton JJ concurring); Keane v An Bord Pleannála (No 3) [1998] 2 ILRM 241, 262 (Keane J; Hamilton CJ

and Barrington J concurring). 113 Electricity Supply Board v Gormley [1985] IR 129, 152 (Finlay CJ, for the Court). 114 Chestvale Properties Ltd v Glackin [1993] 2 IR 35, 45 (Murphy J); Dellway Investments v National Asset

Management Agency (No 3) [2011] 4 IR 1, 327, [2011] IESC 14, [456] (12 April 2011) (Fennelly J). 115 Dellway Investments v National Asset Management Agency [2011] 4 IR 1, 64 [117], [2010] IEHC 364, [7.15] (1

November 2010) (Kearns P, Kelly and Clarke JJ, in a joint judgment).



more likely to be a proportionate restriction than expropriation. On the one hand, the imposition

of a prospective charge for health services was held to be a limited and proportionate restriction

on rights.116 On the other hand, the imposition of a retrospective charge for health services (to

validate payments unlawfully exacted) was held to be an extensive and disproportionate

expropriation.117 The question here, then, is whether the Irish packaging legislation passes the

requirement of minimal impairment. Again, subject to the evidence on this point that might be run

in any challenge, the answer would almost certainly be yes. There are pressing and substantial

reasons; the packaging legislation, whilst extensive, seems to impair the engaged property rights

as little as possible; in particular, there do not seem to be any plausible less restrictive means

available to the state to the achieve the same ends.118

C Proportional Effects

The third of the three steps in the Irish proportionality test is a requirement of proportional effect:

the effects of the impugned legislation on the engaged rights must be proportional to the pressing

and substantial reasons advanced by the state. On the one hand, where even a minor transgression

has an excessive consequence,119 the legislation will be disproportionate and unconstitutional.

Again, where the effects of the legislation fall excessively upon one person or group,120 for the

benefit of another group121 or even of society as a whole,122 the legislation will be disproportionate

and unconstitutional. On the other hand, it

is entirely proper that the State should insist that those who profit from an industrial process should

manage it as safely, and with as little danger to health, as possible. The cost of doing the job safely

and in a healthy manner is properly regarded as part of the industrialist’s costs of production.

Likewise it is proper that he should pay if he pollutes the air, the land or the rivers. It would be

unjust if he were allowed to take the profits and let society carry the cost.123

This plainly covers the position of the tobacco industry. Even if the Irish packaging legislation

could be called into question on the basis that its effects fall excessively upon the tobacco

companies, it is entirely proper that the state should insist that those who profit from tobacco

should market it with as little danger to health as possible. It would be unjust if the tobacco

companies were to be allowed to take the profits and let society carry the cost of healthcare, a cost

that would be reduced if the restrictions in the packaging legislation were effective.

The requirement of proportional effects assesses the strength or weakness of the right which the

state has pressing and substantial reasons to restrict: the more central the restricted activity is to

116 Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105. 117 Ibid. 118 Compare British American Tobacco v Secretary of State for Health [2016] EWHC 1169 (Admin) [650]–[679]

(Green J), affd [2016] EWCA Civ 1182 (Lewison, Beatson and Richards LJJ). 119 Cox v Ireland [1992] 2 IR 503, 524 (Finlay CJ, for the Court), as explained in Murphy v Irish Radio and Television

Commission [1999] 1 IR 12, 26–7 (Barrington J; Hamilton CJ, O'Flaherty, Denham, and Keane JJ concurring). 120 Shirley v O’Gorman [2006] IEHC 27 (Peart J). 121 Blake v Attorney General [1982] IR 117, 139 (O’Higgins CJ, for the Court); Re Article 26 and the Housing (Private

Rented Dwellings) Bill 1981 [1983] IR 181, 191 (O’Higgins CJ). 122 Re Article 26 and the Employment Equality Bill 1996 [1997] 2 IR 321, 367 (Hamilton CJ, for the Court). 123 Ibid; see also O’Callaghan v Commissioner of Public Works [1985] ILRM 364, 368 (O’Higgins CJ, for the Court);

Re Article 26 and the Planning and Development Bill 1999 [2000] 2 IR 321, 354 [93]–[94] (Keane CJ, for the Court).



the enjoyment of the right in question, the less likely the restriction will be proportionate, whereas

the further the restricted activity is from the core of the right, the more likely a restriction is to be

proportionate. Trade marks may not be central to the integrated constitutional protection of

property. For example, where licences are created by law, not only may they be regulated in the

interests of the common good,124 but they are also ‘subject to the conditions created by law and to

an implied condition that the law may change those conditions’.125 There are similar comments in

respect of pensions126 and copyright.127 It is just as true of trade marks.

The question here, then, is whether the Irish packaging legislation passes the requirement of

proportionate effects. Again, subject to the evidence on this point that might be run in any

challenge, the answer would almost certainly be yes. The effects do not fall excessively upon the

tobacco companies, and their property rights are not central to the freedoms or protections engaged

by the restrictions in the packaging legislation.

D Deference

The courts are particularly reluctant to second guess legislative judgments on controversial128 or

sensitive 129 social, economic and medical matters and on major issues of national policy.

Accordingly, in applying the three steps of the proportionality test, courts often afford a great deal

of deference to the state.130 This may ‘be an application of the presumption of constitutionality’,131

by which legislation enacted by the Oireachtas after the Constitution came into force in 1937 is

presumed to be constitutional, unless and until the contrary is clearly established.132 The Court has

applied this presumption in the context of the integrated constitutional protection of property,133

124 State (Pheasantry Ltd) v Donnelly [1982] ILRM 512, 516 (Carroll J), approved in Maher v Minister for Agriculture

[2001] 2 IR 139, 220 [202]–[203] (Denham J, Murphy J concurring); Muldoon v The Minister for the Environment

[2015] IEHC 649 [167]–[175], [180]–[183] (Peart J). 125 Hempenstall v Minister of the Environment [1994] 2 IR 20, 28 (Costello P); Maher v Minister for Agriculture

[2001] 2 IR 139; Muldoon v Minister for the Environment [2015] IEHC 649; see also O’Dwyer v Minister for the

Environment [2001] 1 IR 255, 262, [12] (Geoghegan J) (no obligation not to change the conditions); Gorman v

Minister for Environment and Local Government [2001] 2 IR 414, 429-30 (Carney J). However, see Wurridjal v The

Commonwealth (2009) 237 CLR 309, 439–40 [363]–[364] (Crennan J) (contingency does not automatically remove

a statutory right from scope of constitutional protection); JT International v Cth of Australia (2012) 250 CLR 1, [102]–

[108] (Gummow J) (same). 126 PC v Minister for Social Protection [2017] IESC 63 [27]–[28], [45] (MacMenamin J; Denham CJ, and McKechnie,

Clarke and O'Malley JJ concurring). 127 Phonographic Performance (Ireland) Ltd v Cody [1998] 4 IR 504, 511. 128 Ryan v Attorney General [1965] IR 294, 312 (Kenny J); Dellway Investments v National Asset Management Agency

[2011] 4 IR 1, 119–20 [284]–[287], [2010] IEHC 364, [10.17]–[10.20] (1 November 2010) (Kearns P, Kelly and

Clarke JJ, in a joint judgment) affd Dellway Investments v National Asset Management Agency (No 3) [2011] 4 IR 1,

225, [2011] IESC 14 [110] (12 April 2011) (Denham J). 129 MD v Ireland [2012] IESC 10, [50] (Denham CJ; Murray, Hardiman, Fennelly and Macken JJ concurring). 130 BUPA Ireland v Health Insurance Authority [2006] IEHC 431, [247] (McKechnie J); CRH plc v Competition and

Consumer Protection Commission [2017] IESC 34, [67] (MacMenamin J) (‘substantial latitude’). 131 Colgan v Independent Radio and Television Commission [2000] 2 IR 490, 512 (O’Sullivan J). 132 The classic statements are Pigs Marketing Board v Donnelly (Dublin) Ltd [1939] IR 413, 417 (Hanna J); McDonald

v Bord na gCon [1965] IR 217, 239 (Walsh J); East Donegal Co-operative Livestock Mart Ltd v Attorney General

[1970] IR 317, 340–41 (Walsh J); see most recently Collins v Minister for Finance [2016] IESC 73 [70] (Denham CJ,

and O’Donnell, McKechnie, Clarke, Dunne and Charleton JJ, in a joint judgment). 133 White v Dublin City Council [2004] 1 IR 545, 569 [81] (Denham J; Murray, McGuinness, Fennelly and McCracken

JJ concurring); Clinton v An Bord Pleanána (No 2) [2007] 4 IR 701, 716 [26], 725 [53] (Geoghegan J; Denham,



and the packaging legislation would almost certainly benefit from it and from any attendant

judicial deference to legislative judgment.

This presumption of constitutionality leads to two further presumptions. First, it is presumed that

the Oireachtas intended a constitutional construction of legislation; so where constitutional and

non-constitutional constructions are reasonably open, the Court must choose the constitutional

one. 134 Again, the Courts have applied this presumption in the context of the integrated

constitutional protection of property,135 and the Irish packaging legislation would almost certainly

benefit from it. Second, the presumption of constitutionality leads to the further presumption that

a statutory discretion will be exercised constitutionally 136 and that fair procedures will be

followed.137 Again, the Courts have applied this presumption in the context of the integrated

constitutional protection of property.138 The making of a statutory instrument by the Minister for

Health, pursuant to the discretion conferred by the packaging legislation,139 would almost certainly

benefit from this presumption too.

E Lower and Variable Standards of Review

The Supreme Court applies the proportionality test in a flexible or variable fashion, assessing the

strengths and weaknesses of the restrictions, rights and reasons at issue in the cases.140 But it also

seems to have developed an alternative, lower standard of review. In particular, where it considers

that the Oireachtas is essentially engaged in a balancing of constitutional rights and duties, the

Court effectively applies a rationality test rather than a proportionality test. In such cases, the role

of the Court

is not to impose their view of the correct or desirable balance in substitution for the view of the

legislature as displayed in their legislation but rather to determine from an objective stance whether

the balance contained in the impugned legislation is so contrary to reason and fairness as to

constitute an unjust attack on some individual’s constitutional rights.141

Fennelly, Kearns and Macken JJ concurring); Reid v Industrial Development Agency [2015] IESC 82 [44(v)]

(McKechnie J; Denham CJ, O'Donnell, Laffoy and Charleton JJ concurring). 134 McDonald v Bord na gCon [1965] IR 217, 239 (Walsh J); East Donegal Co-operative Livestock Mart Ltd v Attorney

General [1970] IR 317, 340–41 (Walsh J). 135 National Asset Loan Management Ltd v McMahon [2014] IEHC 71, [42] (Charleton J). 136 East Donegal Co-operative Livestock Mart Ltd v Attorney General [1970] IR 317, 340–41 (Walsh J). 137 Garvey v Ireland [1981] IR 75, 97 (O'Higgins CJ); Dellway Investments v National Asset Management Agency (No

3) [2011] 4 IR 1, 282, [2011] IESC 14, [311] (12 April 2011) (Hardiman J). 138 Dellway Investments v National Asset Management Agency (No 3) [2011] 4 IR 1, 202–4, [2011] IESC 14 [26]–

[29] (Murray CJ); [2011] 4 IR 1, 225, 234, [2011] IESC 14 [111], [135] (Denham J), [2011] 4 IR 1, 282, [2011] IESC

14 [312] (Hardiman J), [2011] 4 IR 1, 321–2, [2011] IESC 14 [435]–[437] (Fennelly J). 139 2015 Act ss 7(10)–(11), 9(10)–(11), 10(9)–(10). 140 See discussion above: sub-headings B Minimal Impairment through D Deference. 141 Touhy v Courtney [1994] 3 IR 1, 47 (Finlay CJ, for the Court); Re Article 26 and the Regulation of Information

(Services Outside the State for the Termination of Pregnancies) Bill, 1995 [1995] 1 IR 1, 45, (Hamilton CJ, for the

Court); Iarnród Éireann v Ireland [1996] 3 IR 321, 376 (O’Flaherty J, for the Court); In re Article 26 and the

Employment Equality Bill, 1996 [1997] 2 IR 321, 334 (Hamilton CJ, for the Court).



This rationality test is a lower, less stringent, more tractable standard of review or scrutiny than

the three-step proportionality test. Even so, legislation can fail this test 142 and be found

unconstitutional. If the Irish packaging legislation is justifiable not only on the basis of the state’s

interests in public health and the protection of children, but also on the basis of constitutional

rights,143 then the state may seek to argue that its constitutionality should be assessed on the basis

of this rationality standard rather than on the basis of the stricter three-step proportionality

standard. And if the rationality test were to applied, then the packaging legislation would almost

certainly survive review or scrutiny; it could not be said that the balance of rights contained in the

packaging legislation is ‘so contrary to reason and fairness’ as to constitute an unjust attack on the

tobacco companies’ property rights.

F Absence of Review

It was not always clear that legislation restricting rights will be subjected to a standard of review

or scrutiny. In Attorney General v Southern Industrial Trust, it was enough for Lavery J that the

legislation restricting the plaintiff’s property rights was directed to the constitutionally-sanctioned

legitimate aims of the ‘exigencies of the common good’ and the ‘principles of social justice’.144

He did not go on to subject that aim to further review or scrutiny, to determine for example whether

the restriction went too far in the pursuit of that aim. Moreover, there is an oft-repeated dictum of

Walsh J in Dreher v Irish Land Commission that might mean that legislation authorised by the

principles of social justice or the exigencies of the common good in article 43 cannot amount to

an unjust attack for the purposes of article 40.3.145

These cases predate the development of the proportionality and rationality standards of review or

scrutiny discussed above. To the extent that they could preclude further review or scrutiny once a

pressing and substantial reason to justify the legislation has been established, then they can no

longer be right. It is unthinkable that the Irish packaging legislation would not be subject to some

standard of review or scrutiny. The only question is which one: a tractable rationality test, or a

more stringent three-step proportionality test. However, it is clear that the packaging legislation

would almost certainly satisfy any applicable test.

VI CONCLUSION

The tobacco companies’ litigation strategy 146 has seen them challenge legislation restricting

tobacco packaging in many jurisdictions and before international tribunals. These cases can turn

142 Re Article 26 and the Health (Amendment) (No 2) Bill 2004 [2005] 1 IR 105, 198 [115] (Murray CJ, for the Court)

(striking down retrospective health charges); White v Dublin City Council [2004] 1 IR 545, 568–9 [80] (Denham J;

Murray, McGuinness, Fennelly and McCracken JJ concurring), striking down an absolute two-month limitation period

in s 82(3B)(a)(i) of the Local Government (Planning and Development) Act 1963, as inserted by s 19(3) of the Local

Government (Planning and Development) Act 1992. 143 See discussion above, Part IV Reasons. 144 (1960) 94 ILTR 161 (SC) 176 upholding s 5(1) of the Customs (Temporary Provisions) Act 1945 (forfeiture of car

used in a crime). 145 [1984] ILRM 94, 96 (‘a piece of legislation which is authorised by Article 43 cannot fall foul of Article 40.3’);

cited in O’Callaghan v Commissioner of Public Works [1985] ILRM 364, 368 (O’Higgins CJ, for the Court);

Electricity Supply Board v Gormley [1985] IR 129, 150 (Finlay CJ, for the Court). 146 Ankita Ritwik, ‘Tobacco Packaging Arbitration and the State’s Ability to Legislate’ (2013) 54 Harvard

International Law Journal 523.



as much on general principles common to many constitutions and treaties as they can on the

specifics of a particular constitutional text. The proportionality analysis of the Court of Appeal for

England and Wales in British American Tobacco v Secretary of State for Health147 probably

supplies an example of the former;148 whereas the analysis of the concept of ‘acquisition of

property’ in section 51(xxxi) of the Australian Constitution by the High Court of Australia in JT

International v Commonwealth probably supplies an example of the latter.149 The one constant is

that the tobacco companies invariably lose. Any challenge to the Irish packaging legislation would

have a similar outcome.

Restrictions upon rights can be justified by reasons which survive review. The Public Health

(Standardised Packaging of Tobacco) Act 2015 and Part 5 of the Health (Miscellaneous

Provisions) Act 2017 together provide for comprehensive standardised packaging of tobacco

products. In particular, there will be strict regulations upon, perhaps even prohibition of the use of

trade marks and other branding. These restrictions potentially engage the integrated protection of

property contained in the Irish constitution. This provides a largely stable and relatively coherent

basis for analysis and development. The Irish packaging legislation does in fact restrict the tobacco

companies’ use of their property, especially trade marks, and the integrated constitutional

protection of property is engaged by these restrictions, albeit that statutorily contingent property

is not at the core of that protection. In public health and the protection of children, the state has

substantial and pressing reasons for the restrictions; and it may even be said that it is vindicating

its citizens’ rights to health and bodily integrity in general, and children’s rights in particular.

In reviewing the impact of the restrictions in the packaging legislation on the tobacco companies’

property rights against that backdrop, the legislation must satisfy a three-step proportionality test

of rational connection, minimal impairment, and proportional effects. Because statutorily

contingent property is not at the core of the integrated constitutional protection of property, it is

easier to restrict it proportionally. Moreover, it is unjust for the tobacco companies to continue to

take the profits but let society carry the cost of healthcare, a cost that would be reduced if the

restrictions in the packaging legislation were effective. However, if the Supreme Court considers

that the Irish packaging legislation seeks to balance the tobacco companies’ speech and property

rights against citizens’ right to health, and children’s rights, then the legislation would have to

satisfy only a rationality test, which it would satisfy easily.

Ireland has been in the vanguard of tobacco control worldwide. With the Public Health

(Standardised Packaging of Tobacco) Act 2015 and Part 5 of the Health (Miscellaneous

Provisions) Act 2017, it continues to set a very important example. Any challenge from the tobacco

industry on property grounds is likely to fail. And Ireland’s children and public health will be all

the better for that.

147 [2016] EWCA Civ 1182. 148 See above, nn 111 and 118. 149 JT International v Cth of Australia (2012) 250 CLR 1. See also, above n 51.



VII APPENDIX

Relevant provisions of the Irish Constitution

Article 40

3. 1 The State guarantees in its laws to respect, and, as far as practicable, by its laws to defend

and vindicate the personal rights of the citizen.

2 The State shall, in particular, by its laws protect as best it may from unjust attack and, in

the case of injustice done, vindicate the life, person, good name, and property rights of

every citizen.

…

Article 42A

1. The State recognises and affirms the natural and imprescriptible rights of all children and

shall, as far as practicable, by its laws protect and vindicate those rights.

…

Article 43 1. 1 The State acknowledges that man, in virtue of his rational being, has the natural right,

antecedent to positive law, to the private ownership of external goods.

2 The State accordingly guarantees to pass no law attempting to abolish the right of private

ownership or the general right to transfer, bequeath, and inherit property.

2. 1 The State recognises, however, that the exercise of the rights mentioned in the foregoing

provisions of this Article ought, in civil society, to be regulated by the principles of social

justice.

2 The State, accordingly, may as occasion requires delimit by law the exercise of the said

rights with a view to reconciling their exercise with the exigencies of the common good.





THE TOBACCO INDUSTRY’S CHALLENGE TO

THE UNITED KINGDOM’S STANDARDISED

PACKAGING LEGISLATION – GLOBAL

LESSONS FOR TOBACCO CONTROL POLICY?

JONATHAN GRIFFITHS*

In 2015, legislation imposing a standardised packaging regime for tobacco products was

passed by the United Kingdom Parliament. The Standardised Packaging of Tobacco Products

Regulations 2015 (UK) came into effect fully from 21 May 2017 and were contested vigorously

by the tobacco industry, both through the legislative consultation process and in the courts.

This article focuses on the claim for judicial review brought by the industry against the

Regulations, R on the Application of British American Tobacco Limited v The Secretary of

State for Health. In that case, the introduction of standardised packaging was challenged on a

number of grounds, including proportionality, compatibility with the right of property and with

international and European Union rules on the protection of intellectual property. All these

arguments were rejected in forceful terms by Green J in the High Court, and again on appeal,

by the Court of Appeal. This article sets out the industry’s claims in detail and explores the

grounds on which the legislation was upheld. It also outlines the European Union legal context

within which the legislation operates, including the important judgment of the Court of Justice

of the European Union in Philip Morris Brands SARL and Others v Secretary of State for

Health (C-547/14). It is suggested here that the reasoning in these judgments may prove

instructive well beyond the borders of the United Kingdom.

I INTRODUCTION

In the United Kingdom, smoking kills over 100 000 people every year. Deaths from smoking

are more numerous than the next six most common causes of preventable death combined.1 At

the same time, large numbers of young people continue to take up the habit. It is estimated that

over 200 000 children between 11 and 15 begin smoking each year.2 In response to this public

health problem, a number of important tobacco control measures have been introduced. These

include compulsory standardised packaging for tobacco products, required under the

Standardised Packaging of Tobacco Products Regulations 2015 (UK) (‘the Regulations’).3

The Regulations came into force on 20 May 2016 and, with effect from 21 May 2017, require

all cigarettes and hand-rolling tobacco to be sold in standardised packaging. The United

Kingdom was the second country in the world (after Australia) to introduce such legislation.

However, its progress onto the statute book was far from smooth. Tobacco companies fought

the measure vigorously, both through the consultation process and in the courts. This article

* School of Law, Queen Mary, University of London. In its description of the legislative process leading up to the

Standardised Packaging of Tobacco Products Regulations 2015 and of the content of those Regulations (see, Part

II Standardised Packaging Legislation, below), this article re-uses some material published in Jonathan Griffiths,

‘On the Back of a Cigarette Packet — Standardised Packaging Legislation and the Tobacco Industry’s Right to

(Intellectual) Property’ (2015) 4 Intellectual Property Quarterly 343. 1 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [61]–[67]. 2 Cyril Chantler, Standardised Packaging of Tobacco: Report of the Independent Review (2014) 4 (‘Chantler

Report’). 3 SI 2015/829.


http://login.westlaw.co.uk/maf/wluk/app/document?src=doc&linktype=ref&context=41&crumb-action=replace&docguid=I366D815021CC11E69F5E923A18E6CE74


The Tobacco Industry’s Challenge to the United Kingdom’s Standardised Packaging Legislation –

Global Lessons for Tobacco Control Policy?


focuses on the legal challenge brought against the Regulations, which had two prongs. In the

first, which was ultimately referred to the Court of Justice of the European Union for a

preliminary ruling in Philip Morris Brands SARL and Others v Secretary of State for Health

(C-547/14) (‘Philip Morris’),4 the companies challenged the legality of a provision of the

Tobacco Products Directive that permits individual member states to go beyond the packaging

controls contained in the Directive by introducing more rigorous measures, including

standardised packaging, at domestic level.5 The second challenge, R on the application of

British American Tobacco Limited v The Secretary of State for Health (‘British American

Tobacco’),6 more wide-ranging and direct, was brought by means of an application for judicial

review of the legality of the Regulations in the High Court of England and Wales.

In this article, I aim to explain in detail the industry’s objections to the United Kingdom’s

standardised packaging legislation in British American Tobacco and to outline the legal

system’s response. At first sight, this may appear a relatively modest goal. However, the scale

of the challenges brought to the Regulations makes it worthwhile. The range of arguments

raised by the tobacco company claimants was exceptionally wide (involving, for example, the

law of evidence, domestic and European constitutional law, human rights law, European and

international intellectual property rules and the rules of the internal market) and it is hoped that

this exploration of the industry’s attempt to derail standardised packaging legislation may

prove valuable and instructive well beyond the borders of the United Kingdom.

II STANDARDISED PACKAGING LEGISLATION – THE EUROPEAN UNION AND THE UNITED

KINGDOM FRAMEWORK

Before looking in more detail at British American Tobacco, it is necessary to outline the

relevant legislative framework at European and domestic levels. As a member of the European

Union, 7 the United Kingdom has enacted tobacco control measures within a framework

deriving from Union law. The Tobacco Products Directive (‘TPD2’)8 is designed to implement

the Union’s obligations under the WHO Framework Convention on Tobacco Control

(‘FCTC’)9 and to replace and update a previous Directive in the area (‘TPD1’).10 TPD2

requires the implementation of extensive restrictions on the labelling and packaging of tobacco

4 [2016] 3 WLR 973. 5 Directive 2014/40 of the European Parliament and of the Council of 3 April 2014 on the approximation of the

laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation

and sale of tobacco and related products [2014] OL J 124/1 (‘EU Directive 2014/10’), Art 24(2). Under Art 10,

specified text and image health warnings must be carried on the outside packaging of tobacco products. Such

warnings must cover 65 per cent of the main surfaces of the unit packet of a tobacco product. 6 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin); [2016] EWCA Civ 1182. 7 Following a referendum held on 23 June 2016, the UK Government has commenced the formal process of

bringing membership of the EU to an end. At the time of writing, it is not possible to state precisely how this

change in Treaty relations will affect the status of EU rules currently forming part of UK law. The Government’s

current intention is to ‘domesticate’ secondary legislation implementing Directives wherever possible. If this

intention is fulfilled, the vast majority of rules deriving from Directives in the area of copyright law will be

retained in existing form at the time of formal departure from the Union. See Department for Exiting the European

Union, Legislating for the United Kingdom’s Withdrawal from the European Union, Cm 9446, (2017). 8 EU Directive 2014/40 above n 5. 9 WHO Framework Convention on Tobacco Control, opened for signature 16 June 2003, 2302 UNTS 166 (entered

into force 27 February 2005). 10 Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the approximation of

the laws, regulations and administrative provisions of the Member States concerning the manufacture,

presentation and sale of tobacco products [2001] OJ L 194/26.




products.11 In particular, it increases the percentage of the space on the outer faces of a tobacco

pack which must be taken up with health warnings, and imposes a series of further prohibitions

on different aspects of product presentation and appearance. TPD2 does not oblige member

states to introduce a fully standardised packaging regime.12 However, the option to do so at

national level is explicitly left open13 by Art 24(2) of the TPD2, which states that:

This Directive shall not affect the right of a Member State to maintain or introduce further

requirements, applicable to all products placed on its market, in relation to the standardisation

of the packaging of tobacco products, where it is justified on grounds of public health, taking

into account the high level of protection of human health achieved through this Directive. Such

measures shall be proportionate and may not constitute a means of arbitrary discrimination or

a disguised restriction on trade between Member States. ...

Some member states, including the United Kingdom, have already taken advantage of the

option presented by this provision or have indicated that they will do so in future.14 In Philip

Morris Brands SARL (C-547/14),15 tobacco companies challenged the legality of Art 24(2).16

The case originated in judicial review proceedings in the High Court of England and Wales, in

which the companies objected to the TPD2 on a variety of grounds (the claim was described

as a ‘kind of general onslaught’ by Advocate General Kokott).17 A number of issues were

referred to the Court of Justice for a preliminary ruling. Amongst the claims, the tobacco

companies argued that article 114 of the Treaty on the Functioning of the European Union

(‘TFEU’)18 did not provide a suitable legislative basis for Art 24(2) because it envisaged the

introduction of more stringent controls on tobacco packaging in some member states and could

not, accordingly, be regarded as having an internal market objective. The Court held that Art

24(2) was not to be interpreted as permitting the introduction of further requirements in relation

to any aspect of the packaging of tobacco products, including those harmonised under the

TPD2. Rather, it was to be interpreted as permitting member states to implement the further

standardisation of tobacco product packaging in respect of aspects of packaging which were

not harmonised under TPD2. TPD2 was held only partially to harmonise the packaging of

11 It also places further regulatory controls on the marketing of tobacco products (including e-cigarettes) and

introduces a prohibition on the marketing of tobacco products with ‘characterising flavours’ (including menthol

cigarettes). 12 An amendment requiring the inclusion of a full, standardised packaging regime within the Directive was

proposed, and rejected, during the legislative process, see Alberto Alemanno and Amandine Garde, Legal Opinion

on the Compatibility of the UK Proposals to Introduce Standardised Packaging on Tobacco Products with the

EU Tobacco Products Directive (Action on Smoking and Health and Cancer Research UK, 2014)

<http://ash.org.uk/information-and-resources/packaging-labelling-information-and-resources/standardised-

plain-packaging/legal-opinion-on-standardised-tobacco-packaging/> 22–3. 13 ‘[P]rovided that those provisions are compatible with the TFEU, with WTO obligations and do not affect the

full application of this Directive’ (Recital 53). 14 Both Ireland and France have also instigated standardised packaging rules. 15 [2016] ECLI:EU:C:2016:325. 16 Philip Morris was one of three references to the Court of Justice on the interpretation and legality of the TPD2

to be heard at the same time, although it is the only one that is directly relevant to the issue of standardised

packaging. In Republic of Poland v Parliament & Council (C-358/14)[2016] ECLI:EU:C:2016:323, Poland

sought annulment of the Union-wide prohibition on menthol cigarettes. In Pillbox 38 (UK) Ltd (C-477/14) [2016]

ECLI:EU:C:2016:324 questions were referred in an another application for judicial review concerning the

domestic implementation of the Directive’s rules concerning e-cigarettes. 17 [2016] 3 WLR 973 (AG Kokott) [2]. 18 ‘Article 114(1) TFEU establishes that the Parliament and the Council are to adopt the measures for the

approximation of the provisions laid down by law, regulation or administrative action in Member States which

have as their object the establishment and functioning of the internal market.’ Philip Morris [2016] 3 WLR 973

[57]; Treaty on European Union and Treaty on the Functioning of the European Union (Official Journal of the

European Union, 2012/C 326/01).




tobacco products within the Union and, as a result, it did not preclude member states from

introducing more stringent controls on the colour and presentation of packaging in areas that

had not been harmonised. Interpreted in that way, Art 24(2) was held to be consistent with Art

114. While partial harmonisation measures do not eliminate all obstacles to trade, they

eliminate some and, accordingly, assist in the establishment of the internal market.19

The Court’s confirmation of Art 24(2)’s legality effectively gave the green light to member

states contemplating the introduction of standardised packaging legislation. These included the

United Kingdom, where the Regulations had already been adopted when Philip Morris was

handed down. The legislative process leading to the Regulations had been protracted.

Following an initial consultation in 2012,20 a provision was inserted into the Children and

Families Act 2014 (UK) authorising the Secretary of State for Health to make regulations

concerning the retail packaging of tobacco products if he or she considers that such regulations

might contribute at any time to reducing the risk of harm to, or promoting, the health or welfare

of people under the age of 18.21 Following this provision coming into force, the government

sought an independent review of the scientific evidence on the effectiveness of standardised

packaging legislation from the paediatrician, Sir Cyril Chantler. His report concluded that, in

conjunction with existing tobacco control measures, such legislation was ‘very likely to lead

to a modest but important reduction over time on the uptake and prevalence of smoking and

thus have a positive impact on public health’.22 Following further consultation in 2014,23 the

Regulations were tabled and received Parliamentary approval through the affirmative

resolution procedure on 19th March 2015.24

The aims of the Regulations, set out in an accompanying memorandum, are first, to discourage

young people from starting to use tobacco products; second, to encourage people to give up

using tobacco products; third, to reduce the appeal or attractiveness of tobacco products; fourth,

to reduce the misleading elements of packaging and the potential for packaging to detract from

the effectiveness of health warnings and, finally, to alter attitudes, beliefs, intentions and

behaviour relating to the reduction in use of tobacco products.25 The Regulations pursue these

goals through a series of stringent controls on the packaging of cigarettes and hand-rolling

tobacco. External packaging surfaces must be presented in a specified dull brown colour and

internal surfaces must either be white or the same dull brown.26 With the exception of health

warnings and other statutorily prescribed information, the only distinguishing text permitted

on the packaging of products covered by the legislation is a brand and variant name. The font

and maximum size of this text is specified. 27 Restrictive conditions are imposed on the

presentation of cigarettes themselves.28 Further constraints relating to the required materials,

19 Philip Morris [2016] 3 WLR 973 [85]–[95]. 20 Department of Health, Consultation on Standardised Packaging of Tobacco Products (2012)

<https://www.gov.uk/government/consultations/standardised-packaging-of-tobacco-products>. 21 Children and Families Act 2014 (UK) s 94. 22 Chantler Report, above n 2. 23 Department of Health (Eng) and Devolved Administrations, Consultation on the Introduction of Regulations

for Standardised Packaging of Tobacco Products (June 2014)

<https://consultations.dh.gov.uk/tobacco/standardised-packaging-of-tobacco-products-1/>. 24 The Regulations came into force on 20th May 2016, the date of the transposition deadline for the TPD2. 25 Department of Health, Explanatory Memorandum to the Standardised Packaging of Tobacco Products

Regulations 2015 (‘Explanatory Memorandum’) [7.3]. 26 Standardised Packaging of Tobacco Products Regulations 2015 (UK) (‘Regulations’), Reg 3 (cigarettes); Reg

7 (hand-rolling tobacco). See also Schs 1–4 for further detail of the text and other markings permitted on the

packaging of cigarettes and hand-rolling tobacco. 27 Sch 1 (cigarettes); Sch 3 (hand-rolling tobacco). 28 Reg 5.



shape and type of packaging for tobacco products are designed to eradicate all other

opportunities for product differentiation. 29 These packaging requirements apply to retail

packaging only (that is, to packaging intended to be presented for sale to consumers).30 Breach

of the Regulations is a criminal offence31 and no compensation is payable for those adversely

affected by the legislation.

The Regulations do not restrict promotion of tobacco products at wholesale level and include

provisions designed to preserve the existence of the intellectual property rights in the Industry’s

brand signs, despite the serious controls placed on the use of those signs. Thus, for example, it

is provided (i) that trade marks and designs relating to tobacco products may still be registered

even though they cannot be applied to tobacco products;32 and (ii) a trade mark proprietor’s

inability to use a registered trade mark relating to tobacco products as a result of the

Regulations will not result in the revocation of that mark.33

III R ON THE APPLICATION OF BRITISH AMERICAN TOBACCO LIMITED V THE SECRETARY OF

STATE FOR HEALTH

Unsurprisingly, tobacco companies brought a wide-ranging legal challenge to the Regulations.

Indeed, Green J, who heard the judicial review of the Regulations in the Queen’s Bench

Division of the High Court noted that ‘no even remotely or marginally arguable stone has been

left unturned’ by the companies.34 Ultimately, he upheld the legality of the Regulations against

all challenges, in a judgment that extended to precisely 1000 paragraphs.35 On appeal, the Court

of Appeal occasionally differed from the judge’s approach to specific aspects of the challenge

but, overall, confirmed his conclusions in the clearest of terms.

British American Tobacco was concerned with the legality of a specific measure in a single

state. Nevertheless, it can justifiably be suggested to have broader significance. A number of

the arguments advanced by the companies in this case seem likely to be rehearsed elsewhere

in one form or another in future. This will be the case, for example, for the claims relating to

(i) the treatment of the company’s evidence, (ii) the proportionality of standardised packaging

legislation, (iii) the alleged interference with the companies’ fundamental right of property,

(iv) the relationship between standardised packaging legislation and European Union trade

mark law, and (v) the legislative competence of member states to introduce standardised

packaging legislation, with particular reference to the TRIPS Agreement.36 The UK courts’

analysis of, and conclusions on these subjects will be of interest in other jurisdictions in which

the industry has challenged tobacco control measures, or seems likely to do so in future. Each

of these important categories of claim is examined further below. However, before considering

each in turn, it is first necessary to pause briefly to note a number of further, less fundamental

arguments that were also raised in British American Tobacco.

The companies challenged the Regulations on the ground that Art 114 did not provide a suitable

foundation for Art 24(2) of the TPD2 and, therefore, that the Regulations were unlawful.

29 Reg 4 (cigarettes); Reg 8 (hand-rolling tobacco); Regs 10–12; Sch 2. 30 See Explanatory Memorandum, 7.10. 31 Reg 15. 32 Regs 13(1)–(3) (trade marks); 14 (designs). 33 Reg 13(4)–(8). 34 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [50]. 35 The Court of Appeal was critical of the extreme length of Green J’s judgment, see R (on the application of

British American Tobacco (UK) Limited) v The Secretary of State for Health [2016] EWCA Civ 1182 [2]. 36 Agreement on Trade Related Aspects of Intellectual Property Rights, adopted 15 April 1994 at Marrakesh,

TRT/WTO01/001, entry into force 1 January 1995.




However, by the time Green J handed down his judgment in British American Tobacco, the

Court of Justice had already decided Philip Morris and, as a result, it was clear that this

challenge was unsustainable.37 The argument that the Secretary of State should have awaited

the judgment in Philip Morris before proceeding with the Regulations, 38 and that the

consultation exercise had been a sham, were also held to be without merit.39 In a further claim

related to the legislative basis for the Regulations, the companies argued that the Secretary of

State had failed to give adequate weight to the fact that a decision to introduce standardised

packaging legislation at national level could only be justified where the ‘high level of

protection of human health’ already achieved through the TPD2 was taken into account. The

companies argued that such legislation could therefore only be introduced if there was clear

evidence that it would achieve a higher level of health protection than that achieved by TPD2.

In rejecting this reading of the provision, Green J held that the Secretary of State had taken

adequate steps to assess the desirability of standardised packaging controls within a legislative

exercise that was ‘precautionary, predictive and related to public health’.40 The Court of

Appeal upheld this conclusion, finding that Art 24(2) did not require a direct comparative

exercise based on specific evidence addressing the relative health benefits of TPD2 packaging

and standardised packaging.41

A parallel claim for judicial review was brought by producers of ‘tipping paper’, the paper

which encases the filter tips of cigarettes, and was joined to the companies’ challenge to the

Regulations. The producers argued that the Regulations’ restrictions on the presentation of the

paper surrounding cigarettes42 were ultra vires, firstly because they were not permitted under

Art 24(2) because they did not relate to ‘packaging’ and, secondly, because they were

disproportionate. On the first of these arguments, Green J held (i) that, read purposively, and

in the light of the FCTC, tipping paper fell within the definition of ‘packaging’; (ii) that, in any

event, member states were free to introduce extra restrictions on the branding of tobacco

products in order to secure the effet utile of the packaging restrictions in the Regulations; and

(iii) even if those arguments were wrong, the TPD2 was a partial harmonisation measure which

did not prevent member states from introducing further public health restrictions on the

presentation of tobacco products.43 On proportionality, the producers argued that there was no

evidence that the controls on the presentation of the paper surrounding cigarettes would serve

a useful public health purpose. However, Green J considered that the Secretary of State had

acted proportionately in determining that the altered appearance of the tipping paper would

have a beneficial impact.44 In a relatively rare instance of substantive disagreement with the

judge, the Court of Appeal did not accept that ‘packaging’ could be interpreted as

encompassing tipping paper. Nevertheless, it upheld his judgment on the ground that the TPD2

was only a measure of partial harmonisation and that the EU legislature had not intended to

prevent member states from standardising the presentation of the paper surrounding cigarettes

more generally.45 On proportionality, the Court of Appeal agreed with the judge’s conclusion

37 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [266]. 38 Ibid [935]–[948]. 39 Ibid [919]–[932]. 40 Ibid [895]. 41 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [261]–[262]. 42 Regulations, Reg 5. 43 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [949]–[979]. 44 Ibid [980]–[1000]. 45 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [280].

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that there were reasonable grounds for believing that the controls on the presentation of tipping

paper would be beneficial to public health.46

A The Challenge to the Secretary of State’s Treatment of the Tobacco Companies’

Evidence

In a claim that has wide potential relevance, the companies argued that the Secretary of State

had acted unlawfully in according limited weight to the evidence they had presented against

standardised packaging legislation during the consultation processes. Green J found that no

such error had been made, stating that ‘…measured against internationally accepted research

and evidence standards, [the companies’] evidence, as a generality, was materially below

par’.47 Accordingly, to the extent that limited weight had been placed on the companies’

evidence, it had been entirely appropriate for the Secretary of State to do so. The judge also

held that, even if insufficient weight had been placed on the industry’s evidence, there was no

reason to believe that such failure had affected the decision-making process leading to

Parliament’s approval of the Regulations.48 In concluding thus, the judge approved the best

practice guidelines on scientific evidence applied by the Secretary of State at the pre-legislative

stage. He took into account the FCTC and WHO guidelines on tobacco industry evidence, and

critical academic studies of the companies’ submissions to the standardised packaging

consultation. He also referred to the judgment in the District Court in the District of Columbia

in Tobacco-Free Kids Action Fund v Philip Morris USA Inc, in which the industry’s systematic

failure to provide honest evidence had been exposed.49

The judge’s conclusions on the industry’s practices on research and evidence were strongly

worded. He noted, for example, that:

Uniquely in this case there is an international consensus from within the WHO and across the

world that tobacco companies are set on subverting national health policies antithetical to their

financial interests. This is, in part, due to experiences in the US courts and the sharp conflict

between public utterances and private analysis. There is in such circumstances a real premium

upon full observance with the principles laid down in the [Civil Procedure Rules] (in so far as

there is day light) with best and transparent research and publication practices generally. It is

in this way that the tobacco companies can persuade a systemically sceptical world that their

research is valid and worthy of the great probative weight they claim for it.50

There were a number of significant ways in which the companies’ evidence was held to fall

below best scientific practice. It was not peer-reviewed, or based on peer-reviewed material,

and it was not transparent, in that it was not benchmarked against the companies’ own internal

documents. The evidence, according to the judge, was ‘virtually devoid of any reference to the

internal documents of the tobacco companies themselves’.51 The evidence presented was often

unverifiable and ignored the broader literature on the subjects at issue. At an individual level,

the judge was scathing in his criticism of the evidence of some of the witnesses who appeared

on behalf of the companies.52

46 Ibid [288]. 47 Ibid [404]. 48 Ibid [376]. 49 Ibid [276]–[376], citing United States of America (and Tobacco-Free Kids Action Fund et Ors, Intervening) v

Philip Morris USA Inc et al, US District Court for the District Court of Columbia 449 F.Supp.2d 1 (Civil Action

No. 99-2496 (GK), 17 August 2006, Judge Gladys Kessler). 50 Ibid [318]. 51 Ibid [292]. 52 See eg, ibid [314]–[315]




On appeal, the Court of Appeal held that Green J had been entitled to refer to the FCTC and its

Guidelines and to the judgment in Tobacco-Free Kids Action Fund, even though the latter, in

particular, had not been canvassed extensively by the parties at the hearing at first instance.

The Court of Appeal also held that the judge had not applied different standards to the expert

evidence relied on by the Secretary of State from those applied to the companies’ experts.

Overall, the Court of Appeal held that the judge had not disregarded or marginalised the

companies’ evidence by applying a ‘sui generis rule which singles out the tobacco companies

for particular and adverse treatment’.53 It was clear that he had reviewed all the expert evidence

in the case in the light of best scientific methodological practice. Any doubts about his approach

could not undermine his overall conclusions on this issue.

B Proportionality

The tobacco companies argued that the Regulations violate the principle of proportionality

because (i) they are not suitable and appropriate to meet the objective of improving public

health, (ii) they are not ‘necessary’, in that other less onerous measures could have been

adopted just as effectively, and (iii) they do not strike a fair balance between the public interest

and the interests of the companies (‘proportionality stricto sensu’). Proportionality was relevant

to a number of the arguments advanced by the companies, including those relating to an alleged

violation of the right of property (discussed below), and incompatibility with the principle of

free movement of goods. It was also raised as a free-standing challenge considered in its own

right by both Green J and the Court of Appeal. Their findings on this issue lie close to the core

of the dispute. Ultimately, it is absolutely clear that the judge and the Court of Appeal were

convinced that the Regulations represented an entirely proportionate response to a serious

health problem. Nevertheless, the framework within which a UK court is obliged to assess the

proportionality of measures within the scope of EU law is complex and it was therefore

necessary for both Green J and the Court of Appeal to consider the applicable principles in

some detail. The judgment of the Supreme Court in R (Lumsdon) v Legal Studies Board

(‘Lumsdon’)54 and that of the Court of Justice in Scotch Whisky Association v Lord Advocate

(C-333/14) (‘Scotch Whisky’)55 were particularly significant in this respect. In Scotch Whisky,

the Court had emphasised that a member state derogating from the freedom of movement of

goods in order to protect human life and health was obliged to provide appropriate evidence of

the proportionality of the measures adopted. However, member states were not required to

prove that ‘no other conceivable measure could enable the legitimate objective pursued to be

attained under the same conditions’. 56 Any court assessing the proportionality of such a

derogation must ‘examine objectively whether it may reasonably be concluded from the

evidence submitted by the member state concerned that the means chosen are appropriate for

the attainment of the objectives pursued and whether it is possible to attain those objectives by

measures that are less restrictive of the free movement of goods’.57 In doing so, the court was

entitled to take account of scientific uncertainty.58

On these foundations, Green J set out a number of principles relevant to the proportionality

analysis. He held that the concept of proportionality under the European Convention on Human


EWCA Civ 1182 [178]. 54 [2016] AC 697. 55 [2016] 1 WLR 2283. 56 Ibid [55]. 57 Ibid [56]. 58 Ibid [57].



Rights59 (‘ECHR’) and the Human Rights Act 1998 (UK) was fundamentally the same as that

applied in EU law. He also noted that certain factors, such as the ‘precautionary’ nature of a

national intervention in an area of scientific uncertainty might provide a ‘margin of

appreciation’ for a decision maker and that the intensity of the court’s review was fact and

context sensitive. Drawing on Lumsdon, he pointed to a number of factors which could affect

the intensity of judicial review for proportionality. These included:

(i) the nature and importance of the ‘private interest’ being derogated or departed from…; (ii)

the importance of the public interest being prayed in aid to justify the departure from the

competing private right; (iii) the need in an EU case to prevent unnecessary barriers to free

movement and market integration…; (iv) the extent to which the alleged derogation itself

furthered a recognised social policy of the EU…; (v) the extent to which the national measure

derogated from free movement in an area where the EU had not legislated but where it was

said that the derogating measure furthered an important consumer protection policy in the

Member State….60

Having traced these important basic principles, he considered their application in British

American Tobacco itself.

On appropriateness and suitability, the companies argued that the Regulations would not

improve public health. They suggested that the evidence from Australia, following the

introduction of standardised packaging legislation, supported this contention and claimed that

the introduction of the Regulations would lead customers to ‘downtrade’ to lower-priced

products and, as a result, to increase their use of tobacco. Green J did not accept this argument,

holding that the Secretary of State’s evidence established a prima facie basis for demonstrating

the suitability and appropriateness of the Regulations. In this respect, his assessment of the

relative merits of the evidence presented by the parties (as discussed above) was significant.

He noted that, while it was necessary to consider the factual foundation and reasoning

underlying the proportionality of the impugned measure at an appropriate level of detail, a

decision maker such as the Secretary of State benefited from a ‘relatively broad margin of

appreciation’ in a case such as this. This margin arose as a result of:

(a) the fact that the Regulations are public health measures where both the precautionary

principle applies and where the scientific evidence is predictive and not fully mature or robust;

(b) the fact that there exist scheduled reviews at points in time when it can be expected that

the evidence will have developed and matured; (c) the fact that the decision maker was

Parliament and that the process of promulgation of the Regulations was supervised by the EU

Commission; (d) the fact that the adoption of standardised packaging measures is endorsed at

the highest level of international consensus; and (e) the fact that this is an area of shared

competence between the EU and the Member States in which the Member States must take a

high level of protection of health as their starting point.61

Great importance was to be attached to legislative activity in the spheres of health and

consumer protection. Also militating in favour of a broad margin of appreciation were the facts

that (i) this was an area where harmonisation is partial; (ii) the decision to introduce the

legislation required a complex evaluation involving political, economic or social choices; (iii)

59 Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November

1950, Rome, entry into force 1953. 60 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [434]. 61 Ibid [629].




the Regulations were passed by affirmative resolution; and (iv) the operation of the Regulations

was to be reviewed after a period of five years.62

The judge’s conclusion that the Regulations were appropriate and suitable was challenged on

appeal. In particular, the companies challenged the ‘margin of appreciation’ accorded to the

Secretary of State. The Court of Appeal doubted the utility of this concept in domestic law but

concluded nevertheless that any error in the judge’s approach had not been determinative

because, regardless of any margin of appreciation applied, he had independently concluded,

after careful examination, that the companies’ evidence was adequate to establish the suitability

and appropriateness of the Regulations. He had not adopted an erroneous ‘manifest

inappropriateness’ standard. The companies also disputed Green J’s reference to the

precautionary principle, suggesting that it should only apply where there is uncertainty as to

the existence of a risk. The Court of Appeal held (i) that an assessment of the proportionality

of a measure made at first instance should not be reversed unless vitiated by error of law, and

(ii) that the precautionary principle could extend to situations, such as that at issue in these

proceedings, in which it is uncertain whether action against a known public health risk would

be effective. In any event, even if the judge had erred in relying on the precautionary principle,

this error had not vitiated his judgment because he had had other reasons for deciding that the

Secretary of State benefited from a relatively broad margin of appreciation and had, quite

independently, reached a prima facie conclusion that the Secretary of State’s evidence was

sufficient to demonstrate the appropriateness of the Regulations without reference to any

margin of appreciation.63

On necessity, the judge held that Parliament acted reasonably in concluding that there was no

equally effective, less restrictive, measure that would have met the aims of the Regulations.

Relying again on Scotch Whisky and Lumsdon, he stated that the Secretary of State was not

required to prove ‘positively that no other conceivable measure could enable the legitimate

objective pursued to be attained under the same conditions’ 64 and that, while all the

circumstances bearing on the question of necessity were to be taken into account, a reviewing

court would be ‘heavily reliant on the submissions of the parties for an explanation of the

factual and policy context’.65 Because it was uncertain whether a margin of appreciation was

available to a decision maker on this issue after Scotch Whisky, Green J applied a test of

‘objective reasonableness’. On this basis, he accepted that Parliament had acted reasonably in

concluding that there was no less onerous, but equally effective, alternative to the

Regulations.66 On appeal, the companies argued that this step of the proportionality review had

been emptied of all substance by the judge. However, while the Court of Appeal accepted that

some aspects of the judge’s reasoning on this issue might be open to criticism, his application

of the ‘objective reasonableness’ test drawn from Scotch Whisky was correct and, on this basis,

he had been entitled to reach the conclusion that the Regulations were necessary.67

As a matter of legal principle, prior to British American Tobacco, there had also been some

uncertainty as to whether or not the proportionality test under EU law also encompasses a third

62 Ibid [438]–[472]. 63 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [223]–[230]. 64 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWHC 1169 (Admin) [660]. 65 Ibid [665]. 66 Ibid [676]. 67 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [236]–[241].



component under which a court is obliged to balance the rights and interests of the parties

(proportionality stricto sensu) in a case such as this. Green J held that it does and that this

element of the test was the same as the ‘fair balance’ enquiry conducted by the European Court

of Human Rights when it considers situations in which competing rights conflict.68 In applying

this test, he noted that tobacco control was a public interest of the first order and that the

competing interest of the companies was ‘profit’. These two interests were said to ‘collide in

the most irreconcilable of ways’ and the balance between them overwhelmingly favoured the

state.69 The companies’ appeal on this point was rejected.70

C The Fundamental Right of Property

The companies also challenged the legality of the Regulations on the ground that they violated

their property rights, most notably their trade marks, under Art 1, Protocol 1 of the ECHR, Art

17 of the Charter of Fundamental Rights of the EU and at common law.71 In essence, they

claimed that the restrictions imposed on the use of trade marks relating to tobacco products

under the Regulations were tantamount to an expropriation of those marks and, more broadly,

of their brands. They argued that such an interference with property rights could only be lawful

on payment of compensation. Green J considered Art 1, Protocol 1 of the ECHR first, noting

that the companies’ intellectual property rights were undoubtedly ‘possessions’ for the purpose

of this provision.72 Having established that the marks were covered by the ECHR’s property

guarantee, he went on to determine whether the Regulations could be classified as a

‘deprivation’ of the companies’ marks or as a less restrictive ‘control’ on their use. This

distinction is significant because states have greater leeway in relation to the latter than the

former. Indeed, generally, in the Strasbourg jurisprudence, there is an assumption that

‘deprivation’ of possessions is only lawful where compensation is paid. Having considered the

relevant case law in detail, the judge concluded that the Regulations were a control on the use

of the companies’ marks rather than an expropriation or deprivation. Trademark law establishes

negative rights and, while the Regulations severely curtailed the companies’ ability to use their

marks, those marks could still be used on communications at a wholesale level (subject to pre-

existing controls on tobacco marketing) and enforced against third party infringers.

Accordingly, they retained their core function, that of indicating the origin of goods. As a result,

there was no deprivation of property.73

Having determined the nature of the interference with the companies’ possessions, Green J

considered whether compensation was necessary. He noted that, under the case law of the

Strasbourg Court, a ‘fair balance’ test was applied. This was the same as the balancing test

previously considered in relation to proportionality and, therefore, clearly came out in the

Secretary of State’s favour. According to the judge, it was important to appreciate the context

of the dispute:


EWHC 1169 (Admin) [432]. 69 Ibid [683]. 70 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [244]–[245]. 71 The companies also sought to argue that there had been an infringement of their right to conduct a business

under Art 16. However, it was held that this ‘heavily circumscribed’ right added nothing to the claim based upon

the right of property: R (on the application of British American Tobacco (UK) Limited) v The Secretary of State

for Health [2016] EWHC 1169 (Admin) [858]–[864]. 72 Ibid [731]. 73 Ibid [732]–[784].




The Claimants seek compensation for the loss of the ability to promote a product that is

internationally recognised as pernicious and which leads to a health ‘epidemic’. It is as such

unlike any other case in which the Courts have granted compensation…. The Claimants could

not identify a case where compensation had been paid for the suppression or control of a

private activity that pursued an end or objective recognised as a public vice.74

Even if the Regulations had been defined as a deprivation of property, rather than as a control

on use, compensation would not have been payable. Under the Strasbourg case law,

compensation generally had to be paid for deprivations of property unless ‘exceptional

circumstances’ prevailed. Green J believed that such circumstances existed here:

The reason why there is no breach of A1P1 if compensation is not paid is due to (a) the

undeniable and all pervasive harm caused by the product; (b) the fact that the trade marks are

used causally to further that harm by promoting the product to consumers; and (c) the fact that

they thereby impose on the State clear up and remedial costs of a staggeringly large scale….

It is hard to avoid the conclusion that the suppression of rights which promote a health

epidemic and impose huge costs on the taxpayer is precisely the sort of circumstance where

exceptionality does apply.75

The Court of Appeal upheld his conclusion on this point.76

The rights under the EU’s Charter of Fundamental Rights77 are closely aligned with those

under the ECHR. Nevertheless, the companies argued that, even if there was no violation of

Art 1, Protocol 1, there could still be a breach of Art 17 of the Charter because Art 17

encompassed an absolute prohibition on interferences with the right of property which fail to

respect the ‘essence’ of that right. On this basis, even if the Regulations were held to be

proportionate, they would still fall foul of Art 17. The judge held that this interpretation of the

requirements of the Charter would lead to absurd outcomes and could not be supported by the

jurisprudence of the Court of Justice.78 Nevertheless, because the issue was not completely free

from doubt, he considered the companies’ claim on the assumption that Art 17 did, in fact,

encompass such an absolute prohibition on the impairment of the ‘essence’ of protected rights.

On this basis, he held that the Regulations did not impair the ‘essence’ of the companies’ trade

mark rights because those trade mark rights primarily provided a cause of action against

infringing third parties.79 Green J’s strong overall conclusion on this issue is worth quoting at

length:

At base this point boils down to the correctness of the [companies’] proposition that the

essence or substance of their trade marks allows them to facilitate a health epidemic … and

that since they are prevented from using their property rights to do this by the Regulations

those measures are unlawful, even if they are otherwise proportionate. In my judgment this is

an unsustainable proposition. Nothing in international or EU law could or would tolerate this

proposition; it runs counter to almost every sensible notion of how and why fundamental rights

are to be defined and it assumes that the tobacco companies’ shareholders have a greater hold

on fundamental rights than do (say) the 600 children a day who start smoking in the UK and

74 Ibid [794]. 75 Ibid [802]. 76 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [91]–[115]. 77 Charter of Fundamental Rights of the European Union (Official Journal of the European Union, 2000/C

364/01). 78 British American Tobacco (UK) Limited v The Secretary of State for Health [2016] EWHC 1169 (Admin)

[825]–[830]. 79 Ibid [831]–[843].



whose long term health prospects and life expectancy are threatened by the [companies’]

product and who can also assert a (fundamental) right to protection of their health. In short and

even assuming that nothing can impair the essence of a fundamental right, the very concept of

‘the essence’ is flexible and it responds to and is governed by overriding public interest

considerations. In the present case the fact that the Regulations intrude upon trade mark usage

is simply a reflection of the fact that the essence of the rights yields to and is defined by

superior health interests; the essence of the right is not impaired or disrespected as a result.80

The Court of Appeal upheld this conclusion on Art 17, holding that the essence of the

companies’ rights was the ability to employ their trade marks as negative rights against third

parties and that those rights were retained under the Regulations. Furthermore, the

jurisprudence of the Court of Justice clearly demonstrated that the right of property under the

Charter is not absolute but can be regulated so far as is necessary in the general interest and is

to be viewed in relation to its social function. The various rights protected under the Charter

sometimes come into conflict and the resolution of such conflicts inevitably involves an

analysis of proportionality. However, this would be impossible if the companies’ claim that the

essence of a right could not be interfered with in any circumstances were to be upheld. This

consequence underlined the absurdity of the companies’ submission on this point.81

It was also argued that, at common law, the property in trade marks could not be interfered

with without the clearly expressed will of Parliament and, even then, only if compensation

were paid. Green J held that Parliament had not ousted the right of property at common law in

adopting the Regulations because there was no clear wording to that effect in the legislation.

However, he held that a common law right of property must inevitably contain similar

limitations to those included in Art 1, Protocol 1 and Art 17. As a result, the common law right

neither prohibited the Regulations nor required the payment of compensation.82 On appeal, the

Court of Appeal upheld this conclusion but employed slightly different reasoning, holding that

the right of property at common law applied to deprivations of property only and not to controls

on the use of property such as that at issue in these proceedings.83

D Incompatibility with European Union Intellectual Property Rights

The companies also argued that the Regulations violated secondary Union legislation on

intellectual property rights. In particular, they claimed that the Regulations were inconsistent

with the unitary character of Community trade marks84 under the Community Trade Mark

Regulation (‘CTMR’).85 Art 1(2) of the CTMR provides that:

80 Ibid [837]. 81 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [116]–[124]. 82 British American Tobacco (UK) Limited v The Secretary of State for Health [2016] EWHC 1169 (Admin)

[844]–[857]. 83 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [125]–[129]. 84 The companies also advanced a parallel, and equally unsuccessful claim, based upon the unitary nature of

Community registered designs: see British American Tobacco (UK) Limited v The Secretary of State for Health

[2016] EWHC 1169 (Admin) [880]–[882]. 85 Regulation (EC) No. 207/2009 of the Council of 26 February 2009 on the Community trade mark [2009] OJ L

78/1 (‘CTMR’). The CTMR has subsequently been amended by Regulation (EU) No 2015/2424 of the European

Parliament and of the Council of 16 December 2015 amending Council Regulation (EC) No 207/2009 on the

Community trade mark and Commission Regulation (EC) No 2868/95 implementing Council Regulation (EC) No

40/94 on the Community trade mark, and repealing Commission Regulation (EC) No 2869/95 on the fees payable

to the Office for Harmonization in the Internal Market (Trade Marks and Designs) (Text with EEA relevance)

[2015] OJ L 341/21 (‘EUTMR’).

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A Community trade mark shall have a unitary character. It shall have equal effect throughout

the Community: it shall not be registered, transferred or surrendered or be the subject of a

decision revoking the rights of the proprietor or declaring it invalid, nor shall its use be

prohibited, save in respect of the whole Community. This principle shall apply unless

otherwise provided in this Regulation.

On the basis of this provision, the companies argued that member states are not permitted to

derogate from the rights granted under the CTMR. However, under the Regulations, the

companies were prohibited from using certain marks on tobacco packaging in the United

Kingdom and, as a result, they claimed, their Community Trade Marks (‘CTMs’) would not

have ‘equal effect throughout the Community’. As a result, the use of the marks was not

prohibited under the Regulations ‘in respect of the whole Community’, as required under Art

1(2) CTMR (set out above). According to the companies, the Regulations were not saved by

Art 110(2), which provides that:

This Regulation shall, unless otherwise provided for, not affect the right to bring proceedings

under the civil, administrative or criminal law of a Member State or under provisions of

Community law for the purpose of prohibiting the use of a Community trade mark to the extent

that the use of a national trade mark may be prohibited under the law of that Member State or

under Community law.

The companies suggested that this provision did not justify the Regulations, which

discriminated between national marks and CTMs.

Green J held that the CTMR was to be construed in the light of superior legal obligations. The

Court of Justice’s trade mark jurisprudence demonstrated that, when granted, trade marks were

implicitly limited. This was apparent from the case law on competition and also from

judgments in which the Court had distinguished between the ‘existence’ and ‘exercise’ of trade

mark rights. Thus, insofar as the TFEU and the TPD2 permitted member states to introduce

restrictions such as those in the Regulations, there was no breach of the CTMR.86 In any event,

the CTMR itself contains a ‘carve-out’ from the unitary nature of CTMs under Art 110(2) and

the Regulations fell within this provision.87

Green J did not accept the companies’ argument that the Regulations discriminated between

national marks and CTMs and, as a consequence, were not covered by Art 110(2). The alleged

discrimination was said to arise as a result of Reg 13(2)(b), which provides that nothing done

in accordance with the Regulations ‘amounts to an enactment or rule of law which prohibits

the use of a trade mark for the purposes of section 3(4) of that Act’. Under this provision, the

Regulations do not preclude the registration, or maintenance, of tobacco marks despite the

wide-ranging prohibitions on their use. The companies emphasised that Reg 13(2)(b) applied

only to national trade marks and not to CTMs and, accordingly, discriminated between the two

forms of trade mark. However, according to Green J, any difference in treatment between these

two categories of mark could objectively be justified by the limits upon the United Kingdom

legislature’s law-making powers. In any event, even if Reg 13(2)(b) were unlawful, the

appropriate remedial response would be the severance of that provision from the legislation

rather than the quashing of the Regulations as a whole. He noted that it was rather strange that

86 British American Tobacco (UK) Limited v The Secretary of State for Health [2016] EWHC 1169 (Admin) [869]. 87 Ibid [870]–[879].



the companies were pressing this point because, from their perspective, Reg 13(2)(b)

represented ‘the only silver lining to [the] otherwise dark cloud’ of the Regulations.88

The Court of Appeal upheld the judge’s conclusions on the CTMR, holding that the

Regulations were exactly the type of provision for which Art 110(2) CTMR was devised. Reg

13(2)(b) of the Regulations did not detract from the prohibitory effect of the Regulations. It

served only to make explicit what was implicit in any event (that is, the fact that compliance

with the Regulations would constitute ‘proper reasons’ for non-use of the mark). The Court of

Appeal also noted that, if Reg 13 of the Regulations were unlawful, it could be severed from

the Regulations. In such circumstances, the remainder of the Regulations would remain intact

and the companies’ position would be worsened, rather than improved.89

E Parliament’s Competence to Make the Regulations — the Common Commercial Policy

and TRIPS

The final argument summarised here is the claim that the United Kingdom Parliament had no

competence to make the Regulations because measures relating to the commercial aspects of

trade marks are within the common commercial policy of the EU under Art 207(1) TFEU, and

therefore fall within the exclusive competence of the EU. In advancing this claim, the

companies relied on the judgment of the Court of Justice in Daiichi Sankyo Co. Ltd v DEMO

Anonimos Viomikhaniki kai Emporiki Etairia Farmakon (C-414/11) (‘Daiichi’).90 This ground

of challenge was rejected by Green J for a number of reasons. He held that the Regulations, in

the framework of the TPD2, overwhelmingly relate to the protection of health. They affect

international trade and trade marks only indirectly. This tangential impact was insufficient for

them to become a matter of common commercial policy. As the power provided by Art 24(2)

relates to the internal market and public health, it falls within the domain of shared competence

between the EU and member states.91 According to the judge, this conclusion was in line with

common sense because if ‘the trade mark tail were allowed to wag the health dog this would

prevent the Member States from adopting any health measures which indirectly affected

international trade’.92 He did not accept that the Judgment in Daiichi altered this position. Only

rules relating to intellectual property with a specific link to international trade fall within the

concept of ‘commercial aspects of intellectual property’ in Article 207(1) TFEU. The simple

fact that legislation has an impact on the use of intellectual property rights does not bring it

within the ambit of the common commercial property.93

Under Daiichi, as long as a national measure is consistent with TRIPS, there is no reason to

doubt its legality. In this instance, the Regulations appeared to be compatible with TRIPS.94

There were a number of reasons for this conclusion. TRIPS was concerned with the registration

of marks and with the right to exclude others from the use of a mark rather than with a right-

88 Ibid [879]. 89 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [130]–[139]. 90 [2014] Bus LR 1. 91 British American Tobacco (UK) Limited v The Secretary of State for Health [2016] EWHC 1169 (Admin)

[908]–[911]. 92 Ibid [909]. 93 Ibid [911]–[914]. 94 The compatibility of Australia’s plain packaging legislation with the TRIPS Agreement has been raised before

a WTO dispute resolution panel (see 2017 17(2) QUT Law Review (forthcoming)). A confidential leak of a draft

of the panel’s report suggests that it will find the legislation to be compatible with TRIPS when it hands down its

final report. See, for example, ‘Tobacco Industry Suffers Defeat as WTO Upholds Australia’s Plain Packaging

Law’, The Guardian, (online), 5 May 2017.




holder’s own use of a mark. Furthermore, under Art 7 TRIPS, registration and enforcement of

trade marks were subject to a requirement to contribute to public welfare. Art 8 of the

Agreement explicitly gave permission to contracting parties to adopt measures necessary to

protect public health. The Regulations fell within the ambit of both of these provisions. The

interpretation of TRIPS for which the companies argued would also be inconsistent with the

principles of the Doha Declaration, which stated that the TRIPS Agreement should not prevent

states from taking measures to protect public health.95 Furthermore, the TRIPS Agreement was

to be interpreted consistently with the FCTC. It did not incorporate an ‘immutable and

unyielding principle of non-discrimination as between different categories of goods and

services’96 and was not to be construed as preventing the adoption of prohibitions on product-

specific trade marks where those marks cause harm to health. Finally, it was to be noted that

Art 17 TRIPS itself permitted limited exceptions to rights within the scope of the Agreement.

While the companies argued that this provision permitted only limitations that were narrow in

scope, the judge noted that the Regulations preserved the right to register a mark for tobacco

products and the right to exercise such a mark to exclude others and, as a result, struck a

proportionate balance between the interests of right holders and third parties and, accordingly,

fell within Art 17.97

On appeal, the companies claimed that the judge had erred in concluding that the Regulations

fell within an area of competence shared between the EU and its member states, but the Court

of Appeal upheld the judge on this point. Art 24(2) TPD2 is a partially harmonising measure

and the United Kingdom retains competence to legislate in the area covered by Art 24(2) or,

more broadly, in areas falling outside the scope of the TPD2.98 Daiichi did not help the

companies. For the reasons given by the judge, the Regulations did not breach TRIPS. In this

regard, the Court of Appeal noted, additionally, that (i) Art 19(2), TRIPS which specifically

contemplates non-use of a trade mark as a result of ‘government requirements’ relating to

goods, does not only apply where the goods concerned have been banned, and (ii) Art 20,

TRIPS, which prohibits unjustified encumbrances upon the use of trade marks, encompassed a

requirement of proportionality. As has been noted above, both the judge and the Court of

Appeal had, in any event, held that the Regulations complied with this requirement.99

IV CONCLUSION

British American Tobacco has clear doctrinal significance within the United Kingdom. For

example, it has further confirmed the existence of significant flexibilities in the assessment of

the proportionality of legislative measures aimed at the protection of health. However, its real

impact may be more wide-ranging. The tobacco industry ‘threw the kitchen sink’ at the

Regulations and failed spectacularly on all points. The judgments at first instance and on appeal

make it absolutely clear that none of the challenges to the legislation advanced by the industry

came anywhere near success. Standardised packaging legislation was understood by the courts

as a proportionate attempt to protect the public against a grave health threat. Green J’s judgment

was unusually outspoken in his condemnation of the companies’ case and in his tracing of the

absurd consequences that would have arisen if their challenges to the Regulations were to have

been accepted. His exasperation with the litigation is palpable.

95 World Trade Organization, Ministerial Declaration on the TRIPS Agreement and Public Health (Doha Round)

adopted on 14 November 2001, WT/MIN(01)/DEC/1. 96 Ibid [916]. 97 Ibid [915]–[916]. 98 R (on the application of British American Tobacco (UK) Limited) v The Secretary of State for Health [2016]

EWCA Civ 1182 [150]–[168]. 99 Ibid [140]–[149].



The outcome of British American Tobacco, and the reasoning leading to that outcome, are

likely to embolden other states which are contemplating the introduction of standardised

packaging legislation, but which have been hesitating in the face of threats that the introduction

of such measures would violate the industry’s legal rights and would therefore result in massive

compensation payments. Some of the conclusions outlined in this article are particularly

significant in this respect. For example, the section of Green J’s judgment in which he analyses

the weaknesses of the companies’ approach to evidence is likely to prove interesting reading

for tobacco control advocates around the world. The conclusions of the academic research on

which he drew to support his criticism of the evidence are also highly informative. Similarly,

the long list of reasons advanced by Green J and the Court of Appeal for concluding that

standardised packaging legislation is compatible with TRIPS suggests that a more direct

challenge on this ground is likely to prove unavailing. Although, of course on this point, we

are soon likely to have the benefit of a more definitive view from a dispute resolution panel.100

Perhaps, however, the most interesting aspect of British American Tobacco was the courts’

determination not to let the ‘trade mark tail wag the health dog’. In lobbying against the

legislation, the industry had placed considerable emphasis upon the status of their brand

symbols as ‘intellectual property’. It had been widely suggested that this categorisation of the

trading interests at issue provided an enhanced level of protection for the industry against

public interest regulation. Thus, for example, in a submission to the first consultation on the

Regulations provided on behalf of the industry, the retired Law Lord, Lord Hoffmann,

expressed the view that standardised packaging legislation constituted an expropriation of the

companies’ intellectual property.101 In its broader lobbying, the industry often reiterated the

claim that such an act of expropriation could only be rendered lawful through the payment of

‘billions’ of pounds in compensation. Both the High Court and the Court of Appeal were

unmoved by these arguments, suggesting that (if necessary) the tobacco companies’ marks

could be treated as one composite ‘brand’ rather than as discrete property entitlements and that

intellectual property rights must always be subject to implicit normative limitations in the

public interest. These conclusions are important, and will come as a surprise to many

intellectual property lawyers. They demonstrate an understandable unwillingness on the part

of the court to allow the legal protection of trading signs to produce entirely unreasonable

outcomes in the sphere of public policy.

100 See discussion, above n 94. 101 Philip Morris Ltd, Standardised Tobacco Packaging Will Harm Public Health and Cost UK Taxpayers

Billions: A Response to the Department of Health Consultation on Standardised Packaging of Tobacco Products

(2012) App 5.





MAKING THE CASE FOR CANADA TO JOIN

THE TOBACCO PLAIN PACKAGING

REVOLUTION

BECKY FREEMAN

This article makes the case for introducing plain packaging reforms in Canada. Australia

successfully introduced these measures in 2012, and other nations have adopted similar laws,

in light of compelling evidence that plain packaging lessens the appeal of tobacco products,

increases the effectiveness of health warnings and curbs the use of packaging to mislead

consumers about the harmful effects of tobacco use. Tobacco industry arguments that plain

packaging does not work, increases illicit trade, presents a slippery slope to over regulating

other products, and hurts small business are unfounded. The proposed Canadian reforms open

the door to improving on plain packaging legislation by increasing the restrictions on:

acceptable brand names, the internal pack design and the appearance of the cigarette itself.

I INTRODUCTION

What is the primary purpose of tobacco packaging? Is it to simply hold products, maintain

tobacco freshness, or is it perhaps designed to provide essential consumer information? While

packaging may perform some of these basic functions, its most critical and exploited role is to

convince consumers they are purchasing a desirable and quality product that reflects their tastes

and personality.1 The tobacco industry and its business allies and partners are refreshingly

candid about the importance of packaging in marketing cigarettes. For example, in a print

industry trade article describing the ‘premiumisation’ of tobacco packaging in Indonesia,

innovations in pack design were said to attract consumers and convey brand messaging:

Features such as velvet touch, soft touch, etching, rise and relief can be applied across the

surface of the packaging to make the product more impactful and raise customer engagement.

The look of the packaging such as intense metallics through the use of foil simulation inks can

also give cigarette packaging the luxurious effect and adds on to the premium feel of the

product. Using colours as a technique is effective, especially black. Black is often used to give

the appearance of strength.2

There are countless examples of tobacco packaging that have been designed to appeal to young

people,3 women,4 smokers concerned about their health,5 and to minimise the impact of health

BSc, MSc, PhD, Senior Lecturer and NHMRC Early Career Research Fellow, School of Public Health, Sydney

Medical School, The University of Sydney. 1 Gerard Hastings, Karine Gallopel-Morvan and Juan Miguel Rey, ‘The Plain Truth about Tobacco Packaging’

(2008) 17 Tobacco Control 361. 2 Sha Jumaru, The Premiumisation of Cigarette Packaging in Indonesia (18 January 2017) Print Innovation Asia

<http://www.printinnovationasia.com/single-post/2017/01/18/The-Premiumisation-of-Cigarette-Packaging-in-

Indonesia>. 3 Phillip Gendall et al, ‘A Cross-Sectional Analysis of How Young Adults Perceive Tobacco Brands: Implications

for FCTC Signatories’ (2012) 12 BMC Public Health 796. 4 Juliana Doxey and David Hammond, ‘Deadly in Pink: The Impact of Cigarette Packaging Among Young

Women’ (2011) 20(5) Tobacco Control 353. 5 David Hammond et al, ‘Cigarette Pack Design and Perceptions of Risk Among UK Adults and Youth’ (2009)

19 European Journal of Public Health 631.




warnings. Tobacco packaging comes in bright colours, metallic tins, and limited edition

designs.6 There are even examples of commemorative packages to mark international special

events such as the football World Cup.7 The industry also varies the packaging shape, size and

opening method to influence brand appeal and perceptions of risk, and to increase cigarette

sales.8 The cigarette pack also serves as portable advertisement, carried and displayed by

smokers.9

Of course, the tobacco industry is not alone in using packaging to attract consumers and sell

more products. A quick glance in the beverage aisle of a large supermarket will reveal endless

sizes, shapes, and design features for what appears to be a relatively straightforward product

— bottled water. However, bottled water drinkers are not consuming a product that is likely to

addict them, make them sick, and send them to an early death. In recognition of the six million

deaths worldwide caused by tobacco products annually, the WHO Framework Convention on

Tobacco Control10 (‘WHO FCTC’) requires that all ratifying nations adopt a comprehensive

ban on tobacco advertising, promotion and sponsorship, and recommends that plain packaging

be included as part of the ban.11

Since Australia first implemented plain packaging of tobacco products in 2012,12 there has

been an international push to make this policy a global standard in the fight to reduce tobacco-

related deaths. The United Kingdom13 and France implemented plain pack provisions in 2016;

Ireland’s law commenced in September 2017,14 New Zealand passed legislation in September

2016,15 and Hungary’s implementation is expected to take effect from May 2019.16 While the

European Union Tobacco Products Directive does not require that member states adopt plain

packaging, it encourages and allows member states to do so.17 At least a dozen other countries

— Norway, Slovenia, Uruguay, Thailand, Singapore, Belgium, Romania, Turkey, Finland,

Chile, South Africa, and Canada — are in the process of requiring plain packaging or are

formally considering doing so.18

6 Michelle Scollo, Becky Freeman and Elizabeth Greenhalgh, 11.10 Packaging as Promotion (November 2016)

Tobacco in Australia: Facts and Issues <http://www.tobaccoinaustralia.org.au/chapter-11-advertising/11-10-

tobacco-display-as-advertising1>. 7 Rob Cunningham, ‘Germany: World Cup Special Edition Cigarette Packs’ (2010) 19 Tobacco Control 265. 8 Kathy Kotnowski and David Hammond, ‘The Impact of Cigarette Pack Shape, Size and Opening: Evidence

from Tobacco Company Documents’ (2013) 108 Addiction 1658. 9 Melanie Wakefield et al, ‘The Silent Salesman: An Observational Study of Personal Tobacco Pack Display at

Outdoor Café Strips in Australia’ (2013) 23 Tobacco Control 339. 10 The World Health Organization Framework Convention on Tobacco Control, opened for signature 21 May

2003, 2302 UNTS 166 (entered into force 27 February 2005) <http://www.who.int/fctc/en/>. 11 World Health Organization, Plain Packaging of Tobacco Products. Evidence, Design, and Implementation

(WHO Press, 2016) <http://apps.who.int/iris/bitstream/10665/207478/1/9789241565226_eng.pdf?ua=1>. 12 Tobacco Plain Packaging Act 2011 (Cth); Tobacco Plain Packaging Regulations 2011 (Cth). 13 Tobacco and Related Products Regulations 2016 (UK). 14 Public Health (Standardised Packaging of Tobacco) Act 2015 (Ireland); Public Health (Standardised Packaging

of Tobacco) Act 2015 (Commencement) Order 2017, SI no 115 of 2017. 15 Smoke-free Environments (Tobacco Standardised Packaging) Amendment Act 2016 (NZ), assented to on 14

September 2016 but not yet in force. 16 European Network for Smoking and Tobacco Prevention and European Respiratory Society, ‘ENSP and ERS

Congratulate Hungary on the Finalisation of Plain Packaging Requirements’ (18 August 2016)

<http://ensp.org/wp-content/uploads/2016/12/ENSP-ERS-congratulate-Hungary.pdf>. 17 Council Directive 2014/40/EU of 3 April 2014 on the Approximation of the Laws, Regulations and

Administrative Provisions of the Member States Concerning the Manufacture, Presentation and Sale of Tobacco

and Related Products and Repealing Directive 2001/37/EC Text with EEA Relevance [2014] OJ L 127/1, s 53. 18 Canadian Cancer Society, Cigarette Package Health Warnings: International Status Report (5th ed, 1 October

2016) Canadian Cancer Society <http://www.tobaccolabels.ca/wp/wp-content/uploads/2016/11/Cigarette-

Package-Health-Warnings-International-Status-Report-English-CCS-Oct-2016.pdf>.



A What is Plain Packaging?

Plain packaging is a somewhat misleading term in that it may conjure images of simple and

clean white boxes with the word ‘cigarette’ printed on them. Indeed, some news article and

editorials arguing against plain packaging will feature imagery of stark white cigarette boxes.19

Plain packaging has two primary properties: (1) removal of all brand imagery and logos; and

(2) standardisation of the appearance of packs, including the same uniform colour across all

brands, and requirements in regard to the shape and size of packs. All health warnings,

including pictorial images, are retained or made larger.

In Australia, plain packaging requires that cigarette packs have a large pictorial health warning

on both the front (75 per cent of the surface) and the back (90 per cent of the surface), that the

remaining pack surface be a drab dark brown colour, that the product brand and variant name

be written in a standard font, size and shade of grey, and that the package be made of stiff

cardboard with no embellishments and have a flip top lid.20 (See Figure 1.) The box must also

adhere to minimum pack dimensions. No company logos, trade marks, or brand colours are

permitted. Similar requirements are applied to cigar and loose-leaf tobacco packages.

19 Alex Scholten, ‘Plain Packaging is Not the Answer to Canada’s Tobacco Problem’, Huffington Post (online), 6

June 2016 <http://www.huffingtonpost.ca/alex-scholten/plain-packaging-tobacco_b_10283546.html>. 20 Department of Health and Ageing (Aust), Tobacco Plain Packaging: Your Guide (9 July 2014) Department of

Health <http://health.gov.au/internet/main/publishing.nsf/Content/tppbook>.



Figure 1: Australian plain packaging design for a cigarette pack21

The goal of comprehensive tobacco control programs, as outlined in the WHO FCTC, is to

reduce the enormous health toll of tobacco use, chiefly by discouraging people from taking up

tobacco consumption, encouraging those who consume tobacco products to quit, preventing

those who have quit from relapsing to use, and protecting people from second-hand smoke.

Plain packaging contributes to effective tobacco control by lessening the appeal of tobacco

products, increasing the effectiveness of health warnings and curbing the use of packaging to

mislead consumers about the harmful effects of tobacco use.22

21 Department of Health and Ageing (Aust), Tobacco Plain Packaging: Your Guide (September 2014)

Department of Health

<www.health.gov.au/internet/main/publishing.nsf/Content/822B369C0196CB1CCA257D140082A22F/$File/T

PP%20%20Your%20Guide%20(High%20Res).PDF>. 22 Department of Health (Aust), Introduction of Tobacco Plain Packaging in Australia (27 May 2016) Department

of Health <http://www.health.gov.au/internet/main/publishing.nsf/content/tobacco-plain>.



B Canada — Plain Packaging a Brief History

While plain packaging laws were first implemented in Australia in 2012, initial discussions of

this policy reform can be traced back to Canada in the mid-1980s. In 1986, at the Annual

General Meeting of the Canadian Medical Association (‘CMA’), Dr Gerry Karr proposed that

cigarettes be sold ‘in the equivalent of plain brown wrappers’. This motion was adopted by the

CMA, and in 1987, then CMA president, Jake Dyck, called on the Canadian federal

government to require ‘tobacco products be sold in plain, standard-size packages that state:

This product is injurious to your health’.23 In 1988, Canadian tobacco control organisations

tried unsuccessfully to convince the federal government to amend Bill C-51, later enacted as

the Tobacco Products Control Act24 to authorise plain packaging regulations. The Tobacco

Products Control Act included provisions to restrict tobacco advertising and phase out

sponsorship.25

Six years later, in 1994, the Canadian Prime Minister, Jean Chrétien, as part of a compensatory

measure for significantly rolling back tobacco taxes, announced a review to examine the

feasibility of tobacco plain packaging and tasked the House of Commons Standing Committee

on Health (‘the Committee’) to make recommendations. In April 1994, with the expressed

support of eight provincial governments for the measure, the Committee began hearings on

plain packaging.26

The tobacco industry mounted a high-profile campaign suggesting there would be significant

job losses among Canadian tobacco workers. Threats were made that the government would

be expected to compensate for revenue lost to the tobacco firms. The tobacco industry,

predictably, used legal threats as their core strategy and made unsubstantiated claims that plain

packaging would be a violation of trade treaties and international intellectual property laws.

Philip Morris and RJ Reynolds retained a high-profile lawyer, Carla Hills, the US Trade

Representative to Canada from 1989 to 1993. She submitted to the Committee a legal opinion

stating that plain packaging would infringe a trade mark provision of the relatively recent North

American Free Trade Agreement (‘NAFTA’) and lead to massive compensation payments to

the tobacco industry. She claimed that plain packaging would also violate the international

General Agreement on Tariffs and Trade (‘GATT’). When these arguments were presented to

the Committee, the members were outraged at the notion that NAFTA could prevent the

Canadian government from implementing an initiative that would save lives.27

Health groups retained their own legal counsel, Jean Castel, a respected professor of

international law at Osgoode Hall Law School, and lawyer Michael Robinson of the Toronto

firm Fasken Campbell Godfrey. They publicly released legal opinions that outlined the clear

health exceptions in both GATT and NAFTA, which allow governments to act in the best

interest of public health.28

23 Physicians for Smoke-Free Canada, The Plot Against Plain Packaging (version 2, 1 April 2008)

<http://www.smoke-free.ca/pdf_1/plotagainstplainpackaging-apr1'.pdf>. 24 Tobacco Products Control Act 1988 (Canada). 25 Physicians for Smoke-Free Canada, Filter Tips. A Review of Cigarette Marketing in Canada

<http://www.smoke-free.ca/filtertips04/tobacco%20act%20provisions.htm>. 26 Rob Cunningham, Smoke and Mirrors: The Canadian Tobacco War (International Development Research

Centre, 1996) <https://prd-idrc.azureedge.net/sites/default/files/openebooks/755-8/index.html>. 27 Ibid ‘Health Committee Studies Plain Packaging’. 28 Ibid.



Despite the intense tobacco industry pressure, the Committee endorsed the concept of plain

packaging:

In the interest of the health of Canadians, as suggested by the evidence available to the

Committee to date and in the absence of evidence to the contrary, the Committee affirms that

plain or generic packaging could be a reasonable step in the overall strategy to reduce tobacco

consumption.29

The Committee further recommended that the federal government establish a legislative

framework to implement plain packaging but that regulations would only be introduced if the

results of Health Canada (the Canadian federal government health agency) research,

‘support[ed] the available evidence that such packaging will reduce consumption’.30 In March

1995, Health Canada released its lengthy report (457 pages) on its studies of plain packaging.31

At that time, it was the most comprehensive examination of plain packaging ever conducted.32

The report concluded:

Plain and generic packaging of tobacco products (all other things being equal), through its

impact on image formation and retention, recall and recognition, knowledge, and consumer

attitudes and perceived utilities, would likely depress the incidence of smoking uptake by non-

smoking teens, and increase the incidence of smoking cessation by teens and adult smokers.33

Canada was then the first country in the world with a parliamentary committee level

endorsement of plain packaging as a government policy.34

An industry legal challenge to the federal Tobacco Act,35 and subsequent changes in health

ministers amidst intense tobacco industry lobbying, meant the issue lost momentum on the

Canadian policy agenda. However, in 2000, Canada paved the way for governments to acquire

significant control of the appearance of tobacco packaging, by becoming the first country to

implement pictorial health warnings on packs. Health warnings were required to cover 50 per

cent of both the front and the back of cigarette packages. As of October 2016, 105 countries or

jurisdictions have adopted graphic health warnings, with Nepal leading in terms of size by

requiring 90 per cent of the front and back of the pack surface to be covered by a health

warning. Canada refreshed and increased the graphic warnings in 2012, requiring that they

cover 75 per cent of both sides of the pack.36

Then, in the October 2015 Canadian election, the Liberal party, led by Justin Trudeau, formed

a majority government. The Liberal win followed on from ten years of a Conservative party

led government under Stephen Harper, an era in which minimal tobacco control reforms and

29 Ibid. 30 Ibid. 31 Marvin E Goldberg et al, When Packages Can’t Speak: Possible Impact of Plain and Generic Packaging of

Tobacco Products (Expert Panel Report Prepared at the Request of Health Canada, 1995). 32 Becky Freeman, Simon Chapman and Matthew Rimmer, ‘The Case for the Plain Packaging of Tobacco

Products’ (2008) 103 Addiction 580. 33 Goldberg et al, above n 3131. 34 Ryan Hoskins, ‘How Canada Lost its Chance to Make Anti-Tobacco History’, TVO Current Affairs (online),

16 February 2016 <http://tvo.org/article/current-affairs/the-next-ontario/how-canada-lost-its-chance-to-make-

anti-tobacco-history>. 35 Tobacco Act, SC 1997, c 13. 36 Canadian Cancer Society, above n 188.



programmes were implemented.37 The Liberal party had campaigned with a commitment to

introduce plain packaging for tobacco products.38 On World NO Tobacco Day, 31 May 2016,

plain packaging was officially put back on the Canadian tobacco control policy agenda with an

official government consultation on proposed requirements. 39 Interested stakeholders and

members of the public were invited to make a consultation submission until the closing date of

31 August 2016. The measures considered under the consultation were very similar to other

tobacco plain packaging laws in that they proposed standardising the colour of all tobacco

packages, prohibiting the use of brand elements on packs, standardising the shape and size of

packages, and mandating how brand names are written on tobacco packages. Health warnings

and other required markings (such as a tax stamp) would not be modified by these changes.

The measures would apply to all tobacco products, including cigarettes, loose cigarette

tobacco, cigars, pipe tobacco, tobacco sticks, smokeless tobacco, kreteks (clove cigarettes),

bidis (a thin roll of tobacco wrapped in a leaf), shisha, tubes, blunt wraps, and rolling papers.

However, some innovative policy measures that go beyond Australian plain pack regulations

and that are not in place in any other jurisdictions are also being considered. These novel

approaches include:

Limits on the number of words in the product brand name;

Package walls of prescribed thickness;

No ‘space fillers’ inside of packages (to prevent modifications to the inner dimensions

of packages);

No distinctive colours or designs (such as grooves, hole or recess) in cigarette filters;

Single length and minimum diameter for cigarettes;

Single unattractive colour for cigarette and other products that are rolled in cigarette

paper (for example tobacco sticks, kreteks (clove cigarettes), tubes, and rolling

papers).40

In January 2017, the consultation summary report was released and a process for undertaking

legislative changes commenced.41 In total, 58 000 responses to the consultation were received,

with 92 per cent in support of the proposed measures. The majority of these comments were

from the general public, but support also came from non-government agencies, public health

organisations, government, and academic researchers. The 8 per cent of submissions not in

support primarily came from industry, retailers and business associations.

Of those opposed to the measures, the arguments put forth included that plain packaging would

not work to reduce smoking and had failed in Australia, be violation of trade agreements and

international intellectual property rights, have prohibitively high implementation costs, lead to

lost tax revenue for governments, result in job losses, and lead to an increase in illicit tobacco

37 Canada, Parliamentary Debates, House of Commons, 30 September 2016, 42nd Parl, 1st Sess, No 85,

Statements by Members: Tobacco Control (Mark Holland)

<http://www.ourcommons.ca/DocumentViewer/en/42-1/house/sitting-85/hansard#Int-9103835>. 38 Canada, Parliamentary Debates, House of Commons, 1 June 2016, 42nd Parl, 1st Sess, No 63. Statements by

Members: Health (Linda Lapointe) <http://www.ourcommons.ca/DocumentViewer/en/42-1/house/sitting-

63/hansard#Int-8956231>. 39 Tobacco Products Regulatory Office, Health Canada, Consultation on ‘Plain and Standardized Packaging’ for

Tobacco Products (31 May 2016) Government of Canada <http://healthycanadians.gc.ca/health-system-systeme-

sante/consultations/tobacco-packages-emballages-produits-tabac/document-eng.php>. 40 Ibid. 41 Health Canada, Consultation Summary: ‘Plain and Standardized Packaging’ for Tobacco Products (January

2017) <http://www.healthycanadians.gc.ca/publications/healthy-living-vie-saine/tobacco-packages-summary-

resume-consultation-emballages-tabac/alt/plain_and_standardized_packaging-eng.pdf>.



use. The tobacco industry also argued that the policy violated the right to freedom of expression

under the Canadian Charter of Rights and Freedoms42 by not allowing manufacturers to

communicate product information and branding elements to adult consumers. Tobacco retailers

suggested it would impact on their ability to serve customers efficiently and make stock

management difficult. Cigar manufacturers claimed that consumers would turn to online

purchasing for more attractive products and argued that only cigarettes should be included, not

other tobacco products.

Bill S-5, for an Act to Amend the Tobacco Act and the Non-smokers’ Health Act and to Make

Consequential Amendments to Other Acts, was passed during its third reading in the Canadian

Senate on 1 June 2017.43 This parliamentary approval now allows Health Canada to develop

draft regulations for plain packaging. These draft regulations will first be published in the

Canada Gazette and then Canadians, and other stakeholders, will have another opportunity to

give their opinions and feedback on the proposal. The measures to introduce plain packaging

of tobacco products will be implemented by regulation.44

During the second reading of the Bill in December 2016, Senator Chantal Petitclerc

(Independent) emphasised in her speech in support of the Bill that:

[B]ill S-5 ensures that compliance with the new packaging requirements does not result in the

loss of registered trademarks. That’s a question that comes back often, so I would like to take

this opportunity to clarify that there has been no finding of a breach on intellectual property

rights in any of the other countries that have already implemented plain and standardized

packaging. There have also been no findings to date that it is inconsistent with any international

trade agreement.45

In her response speech, in March 2017, Senator Judith Seidman (Conservative), the opposition

critic of the S5 Bill, outlined the industry arguments against plain packaging, but balanced this

with overall support for tobacco control, in particular, measures that protect children. Her

concluding remark on the plain packaging aspects of the Bill emphasised her focus on young

people: ‘the question that must be asked is: will the introduction of standardised packaging in

Canada achieve its stated objective to make tobacco cigarettes less appealing to youth and

reduce their consumption?’46

Given that Canada is signalling a commitment to adopt plain packaging measures, it is timely

to re-examine the case for plain packaging.47 This case will be argued by systematically

addressing the common questions and criticisms that the tobacco industry and its allies raise in

order to convince governments that they must not pursue these measures.48

42 Canada Act 1982 (UK) c 11, sch B pt I (‘Canadian Charter of Rights and Freedoms’) s 7. 43 Bill S-5, An Act to Amend the Tobacco Act and the Non-smokers’ Health Act and to Make Consequential

Amendments to Other Acts, 1st Sess, 42nd Parl, 2017. 44 The Bill also contained significant measures to change the regulation of electronic cigarettes. 45 Canada Parliamentary Debates, Senate, 13 December 2016, 1st Sess, 42nd Parl, Vol 150, Issue 87, 1910 (Sen

Chantal Petitclerc) <https://sencanada.ca/en/Content/Sen/chamber/421/debates/087db_2016-12-13-e#46>. 46 Canada Parliamentary Debates, Senate, 9 March 2017, 1st Sess, 42nd Parl, Vol 150, Issue 87, 1510 (Sen Judith

Seidman) <https://sencanada.ca/en/content/sen/chamber/421/debates/104db_2017-03-09-e#47>. 47 Rob Cunningham and Ken Kyle, ‘The Case for Plain Packaging’ (1995) 4 Tobacco Control 80; Freeman,

Chapman and Rimmer, above n 321. 48 Becky Freeman, ‘Tobacco Plain Packaging Legislation: A Content Analysis of Commentary Posted on

Australian Online News’ (2011) 20 Tobacco Control 361; Jenny L Hatchard et al, ‘A Critical Evaluation of the

Volume, Relevance and Quality of Evidence Submitted by the Tobacco Industry to Oppose Standardised

Packaging of Tobacco Products’ (2014) 4(2) BMJ Open

<http://dx.doi.org.ezp01.library.qut.edu.au/10.1136/bmjopen-2013-003757>.



II WILL PLAIN PACKAGING WORK?

Critics of plain packaging suggest that there is insufficient evidence that plain packaging will

‘work’.49 For example, the Alliance of Australian Retailers (‘AAR’) adopted the theme, ‘it

won’t work, so why do it’ in a mass media lobbying effort to block the adoption of plain pack

laws.50 The AAR presented itself as a grassroots organisation that was representing small, local

business. It was quickly revealed through a series of leaked documents, that the AAR was in

fact a front group for the three major multi-national tobacco companies operating in Australia

and had been formed and funded with the exclusive purpose of preventing plain pack laws from

being enacted.51 The tobacco industry has a long history of being highly unsupportive of public

health policy measures that it claims will not work to reduce tobacco.52 And, public health has

an equally long history of providing volumes of evidence that show these policy approaches

are exceedingly effective. The same is true for plain packaging.

As described above, plain packaging is designed to lessen the appeal of tobacco, increase health

warning effectiveness and curb the use of packaging to mislead consumers about the harmful

effects of tobacco use.53 To know whether or not plain packaging ‘works’ it must then be

measured against these three clear objectives. Prior to Australia adopting plain packaging

measures, much of the evidence in support of plain packaging came from experimental studies

where smokers and potential smokers were shown mock-ups of tobacco packages that had

larger health warnings and/or the removal of band elements. Research participants were then

asked about their attitudes, beliefs, and likely behaviours in response to the packs.

A 2013 review of 25 quantitative studies that explored the likely effect of plain packaging on

the three core policy objectives found that studies consistently showed that plain packaging

reduced the appeal of cigarettes.54 And while the results were more mixed, plain packaging

also tended to increase the salience and believability of health warnings and it improved smoker

misconceptions about product strength and associated harms. Pack colour was also found to

play a significant role in influencing consumer perceptions, with lighter coloured packs deemed

to contain weaker and less harmful cigarettes than darker coloured packs. 55 Yet further

reinforcing that plain packaging should not be misinterpreted to mean that tobacco products

are sold in pristine, white boxes.

A 2015 narrative review builds on the above findings and included additional qualitative

research and preliminary population-level data assessing the impact of the Australian plain

packaging laws.56 The review authors emphasised that plain packaging laws are likely to be

49 Deloitte, Tobacco Packaging Regulation: An International Assessment of the Intended and Unintended

Impacts: A Deloitte Report for British American Tobacco (May 2011) Deloitte Touche Tohmatsu Limited

<http://www.webcitation.org/69OaF3cDR>. 50 The media campaign can be viewed online: The Alliance of Australian Retailers, It Won’t Work So Why Do It

(television commercial, 11 August 2010) <https://www.youtube.com/watch?v=hjqeiNvBSqw>. 51 Tobacco Tactics, Alliance of Australian Retailers (17 March 2016)

<http://www.tobaccotactics.org/index.php/Alliance_of_Australian_Retailers>. 52 Mike M Daube and Simon Chapman, ‘Tobacco Plain Packaging’ (2012) 197(5) Medical Journal of Australia

272. 53 David Hammond, ‘“Plain Packaging” Regulations for Tobacco Products: The Impact of Standardizing the Color

and Design of Cigarette Packs’ (2010) 52 (Suppl 2) Salud Publica de Mexico S226. 54 Martine Stead et al, ‘Is Consumer Response to Plain/Standardised Tobacco Packaging Consistent with

Framework Convention on Tobacco Control Guidelines? A Systematic Review of Quantitative Studies’ (2013)

8(10) PLoS One e75919. 55 Ibid. 56 Collin N Smith et al, ‘Plain Packaging of Cigarettes: Do We Have Sufficient Evidence?’ (2015) 8 Risk

Management Healthcare Policy 21.



most effective when accompanied by large graphic health warnings and implemented as part

of a comprehensive smoking prevention strategy. The totality of the evidence reviewed was

deemed to be reliable and supported a strong case that plain packaging can reduce positive

perceptions of smoking and dissuade tobacco use.

A Australian Adult Smoker Responses to Plain Packaging

As evaluation and research of Australia’s plain packaging laws is now available to supplement

earlier experimental work it provides the ‘real world’ evidence that sceptics demanded. A

cross-sectional study that examined Australian adult smokers’ responses to plain packaging

before and one year after implementation found that more smokers disliked their pack,

perceived lower pack appeal, lower cigarette quality, lower satisfaction and lower value.57

More smokers also no longer believed that brands differ in terms of prestige. In terms of the

new and larger graphic health warnings, more smokers noticed them, attributed motivation to

quit to the warnings, avoided specific warnings when purchasing a pack and covered up their

packs. The warnings remained believable, as there was no change to the perceived exaggeration

of harms presented in the warnings. The proportion of smokers who believed that brands do

not differ in harmfulness also increased, but no there was change in the belief that some brand

variants do not differ in strength or to overall the perceived harmfulness of cigarettes. The

study authors concluded that the first two objectives of the legislation relating to reducing

appeal and increasing graphic warning effectiveness had been achieved. However, the third

objective of reducing the extent to which smokers are misled about the harms of smoking was

only partially met, which may be attributed to the fact that misleading brand variant names that

imply reduced harm or product strength, are still permitted under the plain packaging laws.

An earlier population-level, cross sectional study that investigated the impact of Australia's

plain tobacco packaging policy amongst adult smokers in the state of New South Wales two to

three months following implementation found similar results. 58 There was a significant

increase in the absolute proportion of smokers having strong cognitive, emotional, and avoidant

responses to the new and larger graphic health warnings. Similarly, there was a significant

increase in the proportion of smokers strongly disagreeing that the look of their cigarette pack

is attractive, says something good about them, influences the brand they buy, makes their pack

stand out, is fashionable and matches their style. Together these two studies59 confirm that the

policy objectives were met in both the short (two to three months) and long (one year) term

following policy implementation.

While not a direct objective of plain packaging, there is also evidence that the revised health

warnings and plain packaging reforms have an impact on quitting behaviour among adults.60

As happened when Australia first introduced graphic health warnings in 2006, there was a 78

per cent increase in the number of calls to the Quitline (a toll free smoking cessation

57 Melanie Wakefield et al, ‘Australian Adult Smokers’ Responses to Plain Packaging with Larger Graphic Health

Warnings 1 Year After Implementation: Results from a National Cross-sectional Tracking Survey’ (2015) 24

(Suppl 2) Tobacco Control ii17. 58 Sally M Dunlop et al, ‘Impact of Australia's Introduction of Tobacco Plain Packs on Adult Smokers’ Pack-

Related Perceptions and Responses: Results from a Continuous Tracking Survey’ (2014) 4(12) BMJ Open

e005836 <http://dx.doi.org.ezp01.library.qut.edu.au/10.1136/bmjopen-2014-005836>. 59 Ibid; Wakefield et al, above n 57. 60 Sarah Durkin et al, ‘Short-term Changes in Quitting-related Cognitions and Behaviours after the

Implementation of Plain Packaging with Larger Health Warnings: Findings From a National Cohort Study with

Australian Adult Smokers’ (2015) 24 (Suppl 2) Tobacco Control ii26; Jane M Young et al, ‘Association Between

Tobacco Plain Packaging and Quitline Calls: A Population-based, Interrupted Time-series Analysis’ (2014)

200(1) Medical Journal of Australia 29.



counselling service) with the introduction of plain packaging, peaking four weeks after plain

packs initial appearance on the market.61 However, this increased call rate was sustained for

much longer, 43 weeks versus 20 weeks, than when graphic health warnings were introduced.

In a study comparing a series of smoker cohorts that were surveyed about quitting behaviours

before, during the transition period of plain packs being on the market, and one year after

implementation, there was significantly greater increases in quit attempt rates in the transition

and one year following periods, as compared to the period before plain packs.62

B Australian Adolescent Responses to Plain Packaging

The impact these laws had on adolescent perceptions about cigarette brands and packs,63 and

their knowledge of smoking harms has also been investigated.64 A school based cross-sectional

survey conducted prior to and 7–12 months following the implementation of plain pack laws

was the first ‘real world’ study to assess adolescent perceptions of tobacco brands and packs.65

This study found that following plain pack implementation, among the 65 per cent of

adolescents who had seen a cigarette pack in the previous six months, the appeal of cigarette

packs and brands had decreased and there was a large increase in the proportion disagreeing

that some brands have better looking packs than others. The researchers also found a decrease

in positive pack image ratings. These findings were consistent across both smokers and non-

smokers. The same survey examined how cognitive processing of warnings and awareness of

different health consequences of smoking changed following the adoption of the new health

warnings and plain pack laws.66 While students did have an increased awareness of bladder

cancer, which was newly highlighted in the refreshed warnings, students’ cognitive processes,

including reading, attending to, thinking or talking about the health warnings on cigarette

packs, did not change. This is in stark contrast to the adult reactions to the new and larger health

warnings, and may simply reflect the fact that daily smoking amongst Australian adolescents

is exceptionally low, so they do not access and handle cigarette packs as frequently as adult

smokers.67

Another Australian cross-sectional telephone survey, that included adolescents and young

adults (age 12–24 years) from the states of New South Wales and Queensland, assessed

attitudes towards, and responses to, tobacco plain packs pre- (2011) and post- (2012)

implementation.68 Encouragingly, youth responses to plain packaging were greater than they

had anticipated prior to the introduction of plain packaging. This suggests that the experimental

studies conducted prior to the adoption of plain pack reforms may in fact be underestimating

the real-world effects of plain packaging, not overestimating, as some critiques have

suggested.69 For example, in 2011, only 8 per cent of ‘never smokers’ anticipated that plain

packaging would make them less likely to try smoking, whereas in 2012, following policy

61 Young et al, above n 59. 62 Durkin et al, above n 59. 63 Victoria White, Tahlia Williams and Melanie Wakefield, ‘Has the Introduction of Plain Packaging with Larger

Graphic Health Warnings Changed Adolescents’ Perceptions of Cigarette Packs and Brands?’ (2015) 24 (Suppl

2) Tobacco Control ii42. 64 Victoria White et al, ‘Do Larger Graphic Health Warnings on Standardised Cigarette Packs Increase

Adolescents’ Cognitive Processing of Consumer Health Information and Beliefs About Smoking-Related

Harms?’ (2015) 24 (Suppl 2) Tobacco Control ii50. 65 White, Williams and Wakefield, above n 62. 66 White et al, above n 63. 67 Dunlop et al, above n 57; Wakefield et al, above n 56. 68 Sally Dunlop et al, ‘Australia’s Plain Tobacco Packs: Anticipated and Actual Responses Among Adolescents

and Young Adults 2010–2013’ (2016) Tobacco Control (online first, 15 November 2016). 69 Hatchard et al, above n 47.



implementation, 16 per cent reported that the measure made them less likely to try smoking.

Smoker responses were also greater, with significantly more smokers reporting quitting and

social de-normalisation related responses (hiding packs, feeling embarrassed about smoking)

to the plain packaging than predicted.

C Does Plain Packaging Contribute to Lowering the Prevalence of Smoking?

In a similar vein as the ‘it won’t work’ argument was the suggestion that even if plain packaging

did succeed in increasing the effectiveness of health warnings and reducing tobacco brand

appeal, it would have no real effect on actual smoking rates. There are two important points to

consider when analysing the validity of this argument:

(1) Plain packaging was primarily conceived as a prevention measure, to protect young

people from taking up smoking. This means any impact on smoking rates will not be

measurable until sometime in the future, especially in countries like Canada where

youth smoking rates are very low.70

(2) There is no magic policy approach that has seen smoking rates plummet overnight,

reductions are incremental and occur slowly over time as a result of prolonged

investment in public health measures and increased regulation of tobacco products.

Additionally, others have reasoned that requiring ironclad proof of a policy’s effect,

prior to implementing such a policy, means that innovative approaches could never be

adopted.71

Nonetheless, three years after the adoption of plain packaging, the Australian Department of

Health and Ageing commissioned a study to determine if plain packaging had had a discernible

effect on the prevalence of smoking. As Australia had also implemented a series of significant

tobacco tax increases at the same time as adopting plain packaging laws, these were adjusted

for in the final analysis. Tobacco plain packaging in combination with graphic health warnings

was associated with one quarter of the total drop (0.55 percentage points) in smoking

prevalence between December 2012 and September 2015.72 This translates to 108 228 fewer

smokers as a direct result of the policy. Again, it must be emphasised that this was not an

explicit objective of the plain packaging legislation, but nonetheless, a goal of any

comprehensive tobacco control program, of which plain packaging should be a part, is to

reduce smoking rates. Other nations that follow Australia’s lead, can now readily point to

robust and ample evidence of the impact of plain packaging laws on smoking-related opinions,

attitudes, and behaviours.

70 Jessica L Reid et al, Tobacco Use in Canada: Patterns and Trends, 2015 Edition (Propel Centre for Population

Health Impact, University of Waterloo, 2015) <https://uwaterloo.ca/tobacco-use-canada/tobacco-use-canada-

patterns-and-trends-2015-edition>. 71 Ross Gittins, ‘Under Fire, Big Tobacco Rolls Out the Poor Little Stupid Nation Argument’ The Sydney Morning

Herald (online), 30 May 2011 <http://www.smh.com.au/business/under-fire-big-tobacco-rolls-out-the-poor-

little-stupid-nation-argument-20110529-1fb12.html>. 72 Department of Health (Aust), Post-Implementation Review: Tobacco Plain Packaging (2016)

<http://ris.pmc.gov.au/2016/02/26/tobacco-plain-packaging>.



III ARGUMENTS PRESENTED AGAINST PLAIN PACKAGING REFORMS

A Slippery Slope Objections: Tobacco Today, But What Will Be Sold in a Plain Package

Next?

In countries like Australia and Canada,73 where smoking rates are amongst the lowest in the

world, and most smokers wish they could quit, 74 the tobacco industry finds itself in the

awkward position of having very few community supporters. It is necessary then for it to try

to appeal beyond its addicted customer base, and convince non-smokers and other industries

that the products they hold dear will be affected next, in hopes they will assist in lobbying

efforts to derail reforms. Slippery slope arguments position tobacco as the first victim of an

unfair policy that will see other industries fall foul of government over-regulation.

JTI-Macdonald Corp, in Canada, and British American Tobacco, in Australia, and Imperial

Tobacco UK, all developed print materials, online content, and advertisements warning that

other products such as beer, wine, confectionary, and French fries would be next, should the

government pass plain packaging laws.75 These tobacco industry-funded ads featured mock-

ups of these other products in plain packages, some in the same green/brown colour as plain

tobacco packages and some in plain white packaging. In Australia, this attempt to make allies

of other industries backfired when the Winemakers Federation of Australia moved quickly to

publicly dissociate itself from any tobacco industry campaign, stating that its members would

reject any links made between the two industries.76

It is true that some public health stakeholders have encouraged the obesity and alcohol control

fields to adopt some of the same measures that have worked so well to reduce smoking rates,

such as advertising restrictions, tax increases, health warnings, and mass media campaigns.77

However, the pace of success in adopting these approaches has been glacially slow and some

of these policies, particularly taxes and advertising controls on alcohol have already been in

place for decades. The WHO FCTC remains the only global health treaty, food is still

advertised on television around the world, graphic health warnings do not appear on fast food

containers and alcohol is still sold in branded bottles. While there has been some success in

adopting novel obesity prevention taxes, particularly on sugar sweetened beverages, the

amount of tax per product is a small fraction of the high rates of tobacco taxes in the nations

73 E M Greenhalgh, M Bayly and M H Winstanley, ‘1.13 International Comparisons of Prevalence of Smoking’

in M M Scollo and M H Winstanley (eds) Tobacco in Australia: Facts and Issues (Cancer Council Victoria, 2015)

<http://www.tobaccoinaustralia.org.au/chapter-1-prevalence/1-13-international-comparisons-of-prevalence-of-

sm>. 74 Geoffrey T Fong et al, ‘The Near-universal Experience of Regret Among Smokers in Four Countries: Findings

from the International Tobacco Control Policy Evaluation Survey’ (2004) 6 (Suppl 3) Nicotine and Tobacco

Research S341. 75 British American Tobacco Australia, Plain Pack: Campaign (1 September 2011) <https://tinyurl.com/jzkjxud>;

JTI-Macdonald Corp, Where’s the Next Focus for the Canadian Branding Ban? (September 2016)

<https://www.bothsidesoftheargument.ca/wheres-next-focus-canadian-branding-ban/>; Tobacco Tactics, ‘Where

Will it Stop?’ Industry Arguments Against Plain Packaging (19 May 2016)

<http://www.tobaccotactics.org/index.php/Industry_Arguments_Against_Plain_Packaging>. 76 D Stone, ‘Wine Industry Panicked Over Links to Plain Packaging Tobacco’ Food Mag (online), 30 June 2011

<https://foodmag.com.au/wine-industry-panicked-over-links-to-plain-packaging-tobacco/>. 77 Chantal Blouin and Laurette Dubé, ‘Global Health Diplomacy for Obesity Prevention: Lessons from Tobacco

Control’ (2010) 31 Journal of Public Health Policy 244; Mohammed Al-Hamdani and Steven M Smith, ‘Alcohol

Warning Label Perceptions: Do Warning Sizes and Plain Packaging Matter?’ (2017) 78 Journal of Studies on

Alcohol and Drugs 79; Shawna L Mercer et al, ‘Possible Lessons from the Tobacco Experience for Obesity

Control’ (2003) 77 The American Journal of Clinical Nutrition 1073S.



that are also adopting tobacco plain packaging.78 Slippery slope arguments are decidedly flat

in the face of real world progress on other chronic disease prevention policy changes.

B Plain Packaging Will Ruin Small Businesses

The tobacco industry has to cultivate this argument very carefully. If it were to suggest that

plain packaging would have a detrimental financial effect on all tobacco retailers, it is

essentially admitting that the law will negatively impact tobacco sales or profits. This is

tantamount to agreeing that the regulation actually does work to reduce tobacco sales and use.

Instead, the industry suggests that plain packaging laws will shift tobacco sales away from

small, local business owners and retailers and have it end up concentrated in the hands of a

few, large retail outlets. Given that just six corporations control the majority of the global

tobacco industry, 79 the sincerity of this concern for small, local business is somewhat

unconvincing.

The industry argues that smokers will swap to larger retailers because the service they will

receive at small retailers will be too inconvenient. Plain packaging is said to slow down sales

clerks and increase the number of pack selection errors so dramatically that smokers will no

longer be willing to stand in line waiting to buy their purchases. In a simulation study, where

participants were randomly assigned to a display of 50 plain or coloured cigarette packets and

then read a list of cigarette brands, the time it took to locate each packet was significantly

quicker for plain compared to coloured packs.80 A follow-up study that timed real-world

tobacco transactions in 100 convenience stores, newsagents, petrol stations, and supermarkets

immediately before and after plain packaging found that retailers actually slightly decreased

the pack selection times after the legislation was implemented. 81 Neither study found an

increase in pack error selection. It appears that small retailer employees are readily able to

adapt to plain packaging and to read and remember the tobacco brand names that remain on

the packs and continue or even improve on their level of service.

In terms of actual smoker purchasing behaviour, in a large national Australian telephone

survey, the odds of reporting a current tobacco purchase from major retail channels such as

supermarkets, tobacconists, small mixed businesses and petrol stations did not change after the

implementation of plain packaging.82

This ‘financial impact, but no public health impact’ argument is furthered by suggestions that

plain packaging leads to smokers down-trading brands, instead of affecting initiation or

cessation of smoking. It is suggested then that plain packaging reduces prices that can be

charged for premium cigarettes, thereby reducing revenue and profits for retailers. One year

following plain packaging law implementation in Australia saw an increase in the

78 BBC, ‘UK Pushes Ahead with Sugar Tax’ BBC News (Health) (online), 5 December 2016

<http://www.bbc.com/news/health-38212608>. 79 M Eriksen et al, ‘Tobacco Companies Should be Strictly Regulated in Ways that Minimize the Harm Caused

by Their Products’ The Tobacco Atlas (5th ed, 2015). <http://www.tobaccoatlas.org/topic/tobacco-companies/>. 80 Owen B J Carter et al, ‘Measuring the Effect of Cigarette Plain Packaging on Transaction Times and Selection

Errors in a Simulation Experiment’ (2012) 21 Tobacco Control 572. 81 Owen Carter et al, ‘Plain Packaging for Cigarettes Improves Retail Transaction Times’ (2013) 346 British

Medical Journal (online) <http://dx.doi.org.ezp01.library.qut.edu.au/10.1136/bmj.f1063>. 82 Michelle Scollo et al, ‘Did Smokers Shift from Small Mixed Businesses to Discount Outlets Following the

Introduction of Plain Packaging in Australia? A National Cross-Sectional Survey’ (2015) 24 (Suppl 2) Tobacco

Control ii98.



recommended retail price of tobacco products, and the advertised price of products at retail

outlets did not decrease. 83

C Plain Packaging Will Increase the Illicit Tobacco Market

The argument that the market for illicit tobacco products will increase is not unique to plain

packaging; it is used by the tobacco industry, and the third parties it funds, in the face of nearly

every tobacco policy reform that is proposed or enacted.84 The key to controlling the illicit

tobacco market is not to handcuff effective tobacco control measures, but to control the supply

chain of tobacco, and resource and prioritise enforcement efforts appropriately.85 In Canada,

contraband tobacco use has declined considerably since 2009 due to increased, and improved

coordination of, enforcement activities.86 Plain packaging reforms will also retain the traceable

tax paid stamps currently required on all Canadian tobacco packages and should be placed on

packs to avoid obscuring graphic health warnings.87

The Australian market for illicit tobacco did not increase following plain packaging. A large,

national survey showed no increase in use, before versus after the introduction of plain

packaging, of two key subsets of cigarettes likely to be contraband: (1) brands that are produced

specifically for the illicit market, and (2) international brands purchased by survey respondents

for a suspiciously low price.88 The same study also found no increase in use of cigarettes

purchased from informal sources (non-retail purchases). The purchasing of any unbranded

tobacco declined following plain packaging, and the level of use of any completely unbranded

tobacco did not change and remained very low at between 3 per cent and 4 per cent.89

D Governments That Enact Plain Packaging Will Face Legal Action

Threatening legal action, regardless of how unlikely it is that the tobacco industry will be

successful, is de rigueur when governments want to enact innovative legislation to curb tobacco

use.90 The Australian government expected and was prepared when the tobacco industry issued

legal challenges to the plain packaging laws. The industry used nearly identical legal arguments

to those they put forth during the Canadian debate in the 1990s (as described in Part IB above).

The industry launched three separate legal processes, firstly to the Australian domestic courts,91

83 Michelle Scollo, Megan Bayly and Melanie Wakefield, ‘Did the Recommended Retail Price of Tobacco

Products Fall in Australia Following the Implementation of Plain Packaging?’ (2015) 24 Tobacco Control ii90;

Michelle Scollo, Megan Bayly and Melanie Wakefield, ‘The Advertised Price of Cigarette Packs in Retail Outlets

Across Australia Before and After the Implementation of Plain Packaging: a Repeated Measures Observational

Study’ (2015) 24 Tobacco Control ii82. 84 Katherine E Smith, Emily Savell and Anna B Gilmore, ‘What is Known About Tobacco Industry Efforts to

Influence Tobacco Tax? A Systematic Review of Empirical Studies’ (2013) 22 Tobacco Control 144. 85 Hana Ross et al, ‘Approaches for Controlling Illicit Tobacco Trade — Nine Countries and the European Union’

(2015) 64(20) Morbidity and Mortality Weekly Report 547. 86 G Emmanuel Guindon, Robin Burkhalter and K Stephen Brown, ‘Levels and Trends in Cigarette Contraband

in Canada’ (2016) Tobacco Control (Online First, 6 September 2016). 87 Michael Iacobelli et al, ‘When the Tax Stamp Covers the Health Warning Label: Conflicting ‘Best Practices’

for Tobacco Control Policy’ (2016) Tobacco Control (Online First, 20 December 2016) doi:

10.1136/tobaccocontrol. 88 Michelle Scollo et al, ‘Use of Illicit Tobacco Following Introduction of Standardised Packaging of Tobacco

Products in Australia: Results From a National Cross-Sectional Survey’ (2015) 24 (Suppl 2) Tobacco Control

ii76. 89 Ibid. 90 Andrew D Mitchell and Tania Voon (eds), The Global Tobacco Epidemic and the Law (Edward Elgar

Publishing, 2014). 91 JT International SA v Commonwealth of Australia (2012) 250 CLR 1.



next through an investment treaty with Hong Kong, and finally by supporting four countries92

(Cuba, Honduras, Indonesia, and the Dominic Republic) in filing disputes through the World

Trade Organization (‘WTO’) as a violation of the GATT,93 the Agreement on Technical

Barriers to Trade,94 and the Agreement on Trade-Related Aspects of Intellectual Property

Rights.95 Canada is a third party in the WTO dispute, as it ‘has a substantial trade interest in

these proceedings as an importer of tobacco products and the interpretation of WTO obligations

in this dispute could materially affect Canadian domestic measures’.96

Two of these three Australian legal disputes have been resolved, in the government’s favour.

In May 2017, leaked documents suggested that the WTO would also rule in the government’s

favour.97 In October 2012, the High Court of Australia rejected the constitutional challenge to

plain packaging legislation brought by British American Tobacco, Imperial Tobacco, Japan

Tobacco and Philip Morris.98 The primary argument put forth by the tobacco industry was that

plain packaging constituted an unfair acquisition of its property by the Australian government,

for which just terms had not been provided. The High Court ruling in favour of the

Commonwealth emphasised that the Australian government had acquired no benefit or

advantage of a proprietary nature by enacting plain packaging.99 The tobacco industry was also

ordered to pay the Australian government’s associated legal costs.

In December 2015, Philip Morris Asia’s (‘PMA’) challenge to Australia’s plain packaging laws

under a 1993 bilateral investment treaty between Australia and Hong Kong was dismissed. The

tribunal that dismissed the claim stated that the PMA challenge was ‘an abuse of rights’ and

that PMA’s sole rationale for restructuring its company, after plain packaging adoption, was

so that the Australian arm of its business would be based in Hong Kong, and it could then

pursue a complaint under the investment treaty.100

Similarly, in the UK in May 2016, the UK High Court rejected a claim made by British

American, Imperial, Japan International, and Philip Morris, that plain packaging laws infringed

92 A fifth country, Ukraine, withdrew its complaint in 2015: World Trade Organization, DS434: Australia —

Certain Measures Concerning Trade marks and Other Plain Packaging Requirements Applicable to Tobacco

Products and Packaging <https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm>. 93 Marrakesh Agreement Establishing the World Trade Organization: Annex 1B: General Agreement on Trade in

Services, opened for signature 115 April 1994, 1869 UNTS 183, 33 ILM 1167 (1994). 94 Marrakesh Agreement Establishing the World Trade Organization: Annex 1A: Agreement on Technical

Barriers to Trade, opened for signature 15 April 1994, 1867 UNTS 3 (entered into force 1 January 1995). 95 Marrakesh Agreement Establishing the World Trade Organization: Annex 1C: Agreement on Trade-Related

Aspects of Intellectual Property Rights, opened for signature 15 April 1994, 1867 UNTS 3 (entered into force 1

January 1995); see Tania Voon and Andrew Mitchell, ‘Face Off: Assessing WTO Challenges to Australia’s

Scheme for Plain Tobacco Packaging’ (2011) 22 Public Law Review 218. 96 World Trade Organization, Australia — Certain Measures Concerning Trade marks and Other Plain Packaging

Requirements Applicable to Tobacco Products and Packaging: Request to Join Consultations: Communication

from Canada (23 April 2012) <https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-

DP.aspx?language=E&CatalogueIdList=89292,82951,34394,42215,46800,32464,29599,33205,86578&Current

CatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord

=True>. 97 ABC News, ‘Australia Wins Landmark WTO Tobacco Plain Packaging Case’ ABC News (online), 5 May 2017

<http://www.abc.net.au/news/2017-05-05/australia-wins-landmark-wto-tobacco-packaging-case/8498750>. 98 JT International SA v Commonwealth of Australia (2012) 250 CLR 1. 99 Jonathan Liberman, ‘Plainly Constitutional: the Upholding of Plain Tobacco Packaging by the High Court of

Australia’ (2013) 39 American Journal of Law and Medicine 361. 100 McCabe Centre for Law and Cancer, Philip Morris Asia Challenge Under Australia – Hong Kong Bilateral

Investment Treaty Dismissed (2016) <http://www.mccabecentre.org/focus-areas/tobacco/philip-morris-asia-

challenge>.



on their human and intellectual property rights.101 Some of the tobacco companies then took

the case to the Court of Appeal. In November 2016, a panel of three judges dismissed the

appeal.102 The final domestic legal decision was made in April 2017, when the UK supreme

court refused permission to the tobacco industry to appeal against the laws.103

Plain packaging has then been defended successfully in two domestic High Courts. Nations

need to be prepared for and not daunted by tobacco industry legal threats and action. In

recognition of tobacco industry efforts to use the courts to intimidate governments and to thwart

tobacco control reforms, Bloomberg Philanthropies has established an international legal fund

to provide technical support of legal experts to draw up legislation and defend court actions

brought by the tobacco industry.104

Canada has a strong track record of successfully defending its tobacco control reforms when

challenged by the tobacco industry. Recent Supreme Court of Canada rulings suggest there are

legal precedents for restricting the tobacco industry from advertising and promoting its

products and brands,105 and that provisions of the Tobacco Act and the Tobacco Products

Information Regulations106 that impose limitations on freedom of expression are justified as

reasonable, and are constitutional under the Canadian Charter of Rights and Freedoms.107

IV BUILDING ON THE SUCCESS OF PLAIN PACKAGING LEGISLATION

Evidence that Australia’s plain packaging laws are sound and should be replicated and adopted

by other nations is convincing. But there is room to improve on the Australian laws and adopt

measures that may counter industry adaptations and exploitation of loopholes. As marketing

restrictions tighten, the tobacco industry must look to any remaining windows, no matter how

small, to promote its products. The proposed Canadian reforms open the door to significantly

improving on plain packaging legislation, by increasing the restrictions on acceptable brand

names, the internal pack design, and the appearance of the cigarette itself.

The tobacco industry quickly trade-marked new brand names under plain pack laws in

Australia.108 Imperial Tobacco, for example, introduced the brand Peter Stuyvesant + Loosie,

the pack included a bonus cigarette (21 instead of the usual 20), and the name served to promote

this premium offer. 109 The inclusion of the extra cigarette also meant the internal pack

dimensions were modified to accommodate it. The proposed Canadian regulations limiting

brand names and pack fillers may have prevented this promotional activity from occurring.

101 British American Tobacco Limited and others v The Queen [2016] EWHC 1169 (Admin). 102 British American Tobacco UK Ltd & Ors v The Secretary of State for Health [2016] EWCA Civ 1182 (30

November 2016). 103 Chris Johnston, ‘UK supreme court denies tobacco firms permission for plain packaging appeal’, The

Guardian (online), 12 April 2017 <https://www.theguardian.com/society/2017/apr/11/uk-supreme-court-denies-

tobacco-firms-permission-for-plain-packaging-appeal>. 104 Bloomberg Philanthropies, Bloomberg Philanthropies & The Bill & Melinda Gates Foundation Launch Anti-

Tobacco Trade Litigation Fund (18 March 2015) <https://www.bloomberg.org/press/releases/bloomberg-

philanthropies-bill-melinda-gates-foundation-launch-anti-tobacco-trade-litigation-fund/>. 105 Rothmans, Benson & Hedges Inc v Saskatchewan [2005] 1 SCR 188; Canada (Attorney General) v JTI-

Macdonald Corp [2007] 2 SCR 610. 106 Tobacco Act, S C 1997, c 13; Tobacco Products Information Regulations, SOR/2000-272. 107 Canada (Attorney General) v JTI-Macdonald Corp [2007] 2 SCR 610; Canada Act 1982 (UK) c 11, sch B,

Part I Canadian Charter of Rights and Freedoms, s 7. 108 Intellectual Property in Australia, Trade mark Details. Peter Stuyvesant + Loosie (17 October 2013)

<http://www.ipaustralia.com.au/applicant/van-nelle-tabak-nederland-bv/strade marks/1551230/>. 109 Simon Chapman and Becky Freeman, Removing the Emperor’s Clothes: Australia and Tobacco Plain

Packaging (Sydney University Press, 2017).



The perceived sensory differences between cigarettes can be heavily influenced by the image

of the brand, rather than any real differences between premium and value cigarettes. The

importance of tobacco brand names in influencing consumer perceptions of their smoking

experience continues to be evident, even in a plain packaging environment. An Australian

experimental study that took place two years after plain packaging laws were implemented,

found that smokers rated cigarettes given a premium brand name as having a better taste, as

less harsh and less dry than identical cigarettes given a value brand name.110 This result was

irrespective of whether the packs actually contained premium or value cigarettes. Limiting

brand names may be able to reduce the impact that brand names have on convincing smokers

that they are using a quality product.

The appearance of the cigarette itself also has an impact on how smokers perceive quality,

taste, and safety, and the tobacco industry has manufactured and marketed cigarettes of varying

lengths and diameters. Long, exceptionally slim cigarettes have been shown to increase product

appeal to young women,111 and Philip Morris International developed a variant of its flagship

brand, Marlboro, known as Marlboro Intense, that was 1.5 cm shorter, and designed to deliver

the same amount of nicotine but requiring less time to smoke.112 But while the Australian plain

packaging legislation does not allow cigarettes to be printed with logos and marketing

messages, it does not prescribe the length or diameter of cigarettes, or that they be wrapped in

a dissuasive colour. This means that while the cigarette packs are the unattractive drab dark

brown colour, the cigarettes themselves can be a bright, clean white. Research from New

Zealand suggests requiring individual cigarettes to be wrapped in an unattractive colour,113 or

to feature a health warning, could increase the impact of plain packaging. The proposed

Canadian regulations could prevent tobacco manufacturers from using cigarette shape and

length as yet another way of targeting vulnerable smokers.

The Canadian government is planning to refresh the graphic health warnings on tobacco

packages. Canadian tobacco warnings also include personal testimonials from smokers that

have suffered from the devastating impacts of smoking. In December 2016, Health Canada

issued a call for new individuals to submit their stories as part of the graphic warning refresh.114

While personal testimonials are common in tobacco control mass media campaigns,115 they are

not universally part of graphic health warning messages. It is not enough for countries to adopt

graphic health warnings and plain packaging measures. It is essential to renew the images

regularly, and include a variety of messages and message types. Stale messaging lessens the

impact of graphic health warnings over time.116

110 Gemma Skaczkowski et al, ‘Influence of Premium Versus Value Brand Names on the Smoking Experience in

a Plain Packaging Environment: An Experimental Study’ (2017) 7(1) BMJ Open e014099. 111 David Hammond et al, ‘Impact of Female-Oriented Cigarette Packaging in the United States’ (2011) 13

Nicotine and Tobacco Research 579. 112 Daily Mail, ‘Tobacco Firm Launches “Mini-Cigarette” for Shorter Smoking Breaks’, Daily Mail (online), 3

February 2008 <http://www.dailymail.co.uk/news/article-512049/Tobacco-firm-launches-mini-cigarette-shorter-

smoking-breaks.html>. 113 Janet Hoek et al, ‘Dissuasive Cigarette Sticks: The Next Step in Standardised (“Plain”) Packaging?’ (2015) 25

Tobacco Control 699. 114 Health Canada, ‘HC Seeks Testimonials for Tobacco Product Warnings’ (Media Release, 7 December 2016)

<http://www.newswire.ca/news-releases/hc-seeks-testimonials-for-tobacco-product-warnings-

605279886.html?tc=eml_mycnw>. 115 Sarah Durkin, Emily Brennan and Melanie Wakefield, ‘Mass Media Campaigns to Promote Smoking

Cessation Among Adults: An Integrative Review’ (2012) 21 Tobacco Control 127. 116 Culadeeban Ratneswaran et al, ‘Desensitisation to Cigarette Package Graphic Health Warnings: A Cohort

Comparison Between London and Singapore’ (2016) 6 BMJ Open

<http://dx.doi.org.ezp01.library.qut.edu.au/10.1136/bmjopen-2016-012693>.



V THE FUTURE

It is naive to assume that plain packaging will see an end to tobacco marketing. Tobacco

companies will still rely heavily on their relationships with retailers to ensure their brands are

readily available to consumers, are positioned as market leaders, and sold alongside other

everyday items. Tobacco trade marketing is largely unregulated and allows the tobacco

industry to offer retailers incentives and discounts to push its brands to consumers.117 However,

one potential benefit of plain packaging is that it may also curb social media and consumer

generated marketing of tobacco brands. In an age where consumers regularly post photos and

videos of their favourite brands to social media, with little or no incentive from brand owners,

a tobacco pack that is mostly covered in gruesome disease imagery offers little incentive to

‘selfie’ takers.118 The next generation of children will grow up with no knowledge or memory

of tobacco brand imagery — the first to do so in more than 100 years.

Since the Australian adoption of tobacco plain packaging in 2012, there has been increasing

international momentum to spread this successful reform. Canada appears poised to become

the next nation to adopt and implement this essential component of a comprehensive ban on

tobacco advertising. Just as on-pack graphic health warnings once seemed a radical and

subversive measure, plain packaging is predicted to become commonplace amongst nations

committed to improving public health. Branded tobacco packs are set to be novelty items

destined for museum collections.

117 Suzan Burton et al, ‘Marketing Cigarettes When All Else is Unavailable: Evidence of Discounting in Price-

sensitive Neighbourhoods’ (2014) 23 Tobacco Control e24. 118 Becky Freeman et al, ‘Digital Junk: Food and Beverage Marketing on Facebook’ (2014) 104(12) American

Journal of Public Health e56. The Oxford English Dictionary defines ‘selfie’ as: ‘A photograph that one has taken

of oneself, typically one taken with a smartphone or webcam and shared via social media’: Oxford English

Dictionary (online ed, 7 July 2017) <https://en.oxforddictionaries.com/definition/selfie>.





INVESTOR–STATE DISPUTE SETTLEMENT

AND TOBACCO CONTROL: IMPLICATIONS

FOR NON-COMMUNICABLE DISEASES

PREVENTION AND CONSUMPTION-CONTROL

MEASURES

HOPE JOHNSON*

Public health advocates and policy makers have long considered how to translate the successes

of tobacco control measures to address alcohol abuse and the excessive consumption of ultra-

processed and nutrient-poor foods. Correspondingly, the strategies adopted by tobacco

companies to prevent or delay regulation often parallel those adopted by the alcohol and food

industries. Philip Morris, a leading tobacco company, has recently used investor–state dispute

settlement (ISDS) mechanisms as a new strategy to hinder or prevent tobacco control measures

in the form of plain packaging requirements. The cases that followed may have implications

for the development of novel consumption-control measures, like plain packaging laws, aimed

at preventing non-communicable diseases such as cancer and cardiovascular disease. This

paper considers how the challenges to tobacco control measures through ISDS mechanisms

could affect the development of consumption-control measures aimed at reducing alcohol

abuse and unhealthy food consumption for non-communicable disease prevention. Using the

recent ISDS challenges by Philip Morris as case studies, this paper draws out lessons and

issues for the future development of consumption-control measures.

I INTRODUCTION

Investor–state dispute settlement (‘ISDS’) provisions in investment treaties allow foreign

investors to use international investment dispute settlement processes against a host

government in particular circumstances. Criticisms of ISDS mechanisms centre on whether

these processes hinder the introduction of new, or the amendment of pre-existing, regulations

necessary to promote public health, environmental protections and related human rights.1 In

fact, opposition to the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment

Partnership largely focused on the inclusion of ISDS clauses.2

These concerns about the potential impacts of ISDS on public measures have come to a head

in recent years,3 particularly when tobacco company Philip Morris brought claims against

* PhD (QUT), Post-doctoral research fellow, Intellectual Property and Innovation Law research program at the

School of Law, Faculty of Law, QUT. 1 For the purposes of this article, ‘regulation’ refers to a broad range of regulatory mechanisms, and adopts the

definition provided by Julia Black: ‘the intentional activity of attempting to control, order or influence the

behaviour of others’: Julia Black, ‘Critical Reflections on Regulation’ (2002) 27 Australian Journal of Legal

Philosophy 1, 1. 2 Leon Trakman and Luke Nottage, ‘As Asia Embraces the Trans-Pacific Partnership, ISDS Opposition

Fluctuates’, The Conversation, 20 November 2015 <http://theconversation.com/as-asia-embraces-the-trans-

pacific-partnership-isds-opposition-fluctuates-50979>; Ian A Laird, ‘TPP and ISDS: The Challenge from Europe

and the Proposed TTIP Investment Court’ (2016) 40 Canada-United States Law Journal 106. 3 Note that alongside the tobacco-related disputes, the other key ISDS case in the public health space is Eli Lilly

and Company v Canada (ICSID Case No UNCT/14/2), which entailed a pharmaceutical company bringing an


Investor-State Dispute Settlement and Tobacco Control: Implications for Non-Communicable

Diseases Prevention and Consumption-Control Measures


Australia and Uruguay respectively. In both cases, the claims related to each country’s

introduction of standardised tobacco packaging requirements. These cases reveal both

strengths and weaknesses in the ISDS process, and may have implications for the negotiation

of future trade deals encompassing ISDS provisions. The purpose of this article, however, is to

reflect upon the implications of Philip Morris’s ISDS challenges to tobacco control for the

adoption and development of consumption-control measures more broadly.

Tobacco use, unhealthy diets and alcohol abuse are three of the four main modifiable

behaviours that increase the risk of non-communicable diseases (‘NCDs’), such as cancer,

diabetes and cardiovascular diseases.4 Collectively, NCDs have become the main cause of

human deaths worldwide.5 The adverse impacts of NCDs on human life, as well as related

flow-on costs, disproportionately affect low- and middle-income countries.6 The increased

prevalence of NCDs is an outcome of shifts in epidemiological, demographical and nutritional

trends. Specifically, trade and investment flows between countries since the 1980s,

underpinned by trade and investment agreements and policies, have significantly influenced

the social and physical environments that drive NCDs.7 International trade and investment have

enabled and improved the access to, and availability and promotion of alcohol, tobacco and

ultra-processed,8 nutrient poor foods (‘risk commodities’). For instance, a significant body of

work has examined how liberal trade policies, and aspects of globalisation more generally,

have led to a shift within middle and low-income countries towards ‘Western’ diets that

increase the risk of NCDs.9

The consumption of these risk commodities is the main behaviour that regulatory interventions

can influence to reduce the impact of NCDs.10 To date, the most successful consumption-

control regulations have concerned tobacco-related products. In fact, worldwide obesity has

more than doubled, while the percentage of the population that smokes has globally declined.11

Regulatory interventions to influence tobacco use have primarily taken the form of fiscal

action against Canada under the North American Free Trade Agreement, for the invalidation of patents for two

pharmaceutical products. 4 Note, the fourth modifiable behaviour is physical inactivity, which is often addressed by measures to influence

diets, such as informational campaigns. 5 World Health Organization, Global Status Report on Noncommunicable Diseases 2014 (2014) 8

<http://apps.who.int/iris/bitstream/10665/148114/1/9789241564854_eng.pdf>. 6 Ibid xi. Around three quarters of NCD deaths worldwide, and the significant majority of premature deaths, occur

in low- and middle-income countries. 7 See eg, Tikki Pang and G Emmanuel Guindon, ‘Globalization and Risks to Health’ (2004) 5(Suppl 1) EMBO

Reports S11. 8 Ultra-processed foods are those foods that are ready-to-eat or ready-to-heat and which have comparatively more

added sugar, saturated fat and sodium as well as less fibre and a much greater energy density. See eg, Carlos

Augusto Monteiro et al, ‘Increasing Consumption of Ultra-Processed Foods and Likely Impact on Human Health:

Evidence from Brazil’ (2011) 14 Public Health Nutrition 5. 9 See eg, Barry M Popkin and Penny Gordon-Larsen, ‘The Nutrition Transition: Worldwide Obesity Dynamics

and Their Determinants’ (2004) 28(S3) International Journal of Obesity S2; C M Doak et al, ‘The Dual Burden

Household and the Nutrition Transition Paradox’ (2005) 29 International Journal of Obesity 129; Corinna

Hawkes, ‘The Role of Foreign Direct Investment in the Nutrition Transition’ (2005) 8 Public Health Nutrition

357; Sharon Friel et al, ‘A New Generation of Trade Policy: Potential Risks to Diet-Related Health from the Trans

Pacific Partnership Agreement’ (2013) 9 Globalization and Health 46. 10 This is because alcohol abuse, tobacco use, unhealthy diets and inadequate physical activity are modifiable

behaviours. 11 World Health Organization, Prevalence of Tobacco Smoking (2016) Global Health Observatory (GHO) Data

<http://www.who.int/gho/tobacco/use/en/>. Note, claims that decline in smoking rates has contributed to

increases in obesity rates are unsupported: see eg, Jonathan Gruber and Michael Frakes, ‘Does Falling Smoking

Lead to Rising Obesity?’ (2006) 25 Journal of Health Economics 183.



measures, prevention and education initiatives, and legislative measures.12 These responses are

facilitated and required by the World Health Organization’s (‘WHO’) International

Framework Convention for Tobacco Control (‘FCTC’), the first, and at present the only

international treaty supporting consumption-control measures for a risk commodity.

This is not to suggest that tobacco control has been a success. With over five million people

dying each year from tobacco-related illnesses,13 tobacco control still has a long way to go. The

number of smokers worldwide has increased due to population growth, and most people who

smoke live in low- and middle-income countries where capacity to prevent and treat tobacco-

related diseases is lower.14 However, the challenges and successes of tobacco control hold

lessons for other consumption-control regulatory interventions, which for various reasons tend

to be far less developed.

This article begins by exploring the approaches to and development of consumption-control

measures. This discussion sets the context for exploring the tensions that exist between

international investment law and these consumption-control measures. The two disputes

regarding tobacco control measures brought by Philip Morris through ISDS mechanisms are

then considered. Based on these case studies, this article draws out potential implications of

ISDS mechanisms for the future of consumption-control policies.

II REGULATORY STRATEGIES FOR REDUCING MODIFIABLE RISK FACTORS FOR NCDS

A Approaches to Regulatory Strategies

It is well-established that regulation has a role in reducing the common modifiable risk

behaviours for NCDs. Along with several UN General Assembly Resolutions supporting

regulatory interventions to prevent NCDs,15 the WHO’s Global Action Plan for Prevention and

Control of NCDs encourages member states to:

Strengthen programmes for the prevention and control of noncommunicable diseases with

suitable expertise, resources and responsibility for needs assessment, strategic planning, policy

development, legislative action, multisectoral coordination, implementation, monitoring and

evaluation.16

12 See eg, World Health Organization, WHO Report on the Global Tobacco Epidemic 2015: Raising Taxes on

Tobacco (2015) <http://apps.who.int/iris/bitstream/10665/178574/1/9789240694606_eng.pdf?ua=1&ua=1>. 13 World Health Organization, above n 11. 14 Marie Ng et al, ‘Smoking Prevalence and Cigarette Consumption in 187 Countries, 1980–2012’ (2014) 311

Journal of the American Medical Association 183. This study observed that Canada, Norway, Iceland and Mexico

reduced smoking prevalence by half between 1980 and 2012. 15 Prevention and Control of Non-Communicable Diseases, GA Res 64/265, UN GAOR, 64th sess, Agenda Item

114, UN Doc A/RES/64/265 (20 May 2010); Political Declaration of the High-level Meeting of the General

Assembly on the Prevention and Control of Non-Communicable Diseases, GA Res 66/2, 64th sess, Agenda Item

117, UN Doc A/Res/66/2 (24 January 2012); Outcome Document of the High-level Meeting of the General

Assembly on the Comprehensive Review and Assessment of the Progress Achieved in the Prevention and Control

of Non-Communicable Diseases, GA Res 68/300, 68th sess, Agenda Item 118, UN Doc A/Res/68/300 (17 July

2014). 16 World Health Organization, Global Action Plan for the Prevention and Control of NCDs 2013–2020 (2013)

<http://www.who.int/nmh/publications/ncd-action-plan/en/> 23; endorsed by: World Health Organization,

Follow-up to the Political Declaration of the High-level Meeting of the General Assembly on the Prevention and

Control of Non-Communicable Diseases, Sixty-sixth World Health Assembly, Agenda Item 13.1, Resolution

WHA 66.10 (27 May 2013) <http://apps.who.int/gb/ebwha/pdf_files/WHA66/A66_R10-en.pdf>.




From an examination of legal and public health literature, this article identifies three broad

models for regulating the common modifiable risk factors for NCDs.17 The first approach is

largely influenced by libertarian political philosophy, with its emphasis on individual

autonomy and low levels of state intervention, coupled with rational choice theory from

neoclassical economics.18 From this perspective, the consumer is a rational actor optimally

placed to make decisions in their own interest.19 Regulations in line with this approach centre

on information disclosure such as education campaigns and mandated warnings on product

labels. The reasoning behind this approach is that consumers, as rational actors, only require

information, to make decisions that are in their self-interest. It is open to an individual to

consider that the benefits of consuming a risk commodity — for example personal enjoyment

— outweigh the health and financial costs. In addition to the provision of information, a

neoclassical approach to addressing the risk factors for NCDs may support taxes on risk

commodities, provided that the taxes are equivalent to the societal benefits of declines in the

consumption of risk commodities such as unhealthy food choices or tobacco.20

The second approach to regulatory design for reducing NCD modifiable risk factors is referred

to as a ‘libertarian paternalist’ approach.21 Based on insights from behavioural economics and

psychology, the libertarian paternalism focuses on how choices are presented to consumers,

and the environmental factors that influence consumer decisions. The aim of such regulatory

interventions is to gently persuade or ‘nudge’ individuals towards desired behaviours.22 The

libertarian paternalist approach marks a shift away from the consumer as rational decision-

maker to a new model of consumption-control policies that, in minor or significant ways, alter

the environments in which consumers make choices about what to consume. Using packaging

standardisation regulations for tobacco as an example, Alessandro explained, ‘The focus of the

17 While regulatory responses certainly differ across jurisdictions, regulatory strategies for tobacco control have

tended to converge, as facilitated by the WHO Framework Convention on Tobacco Control. See eg, Donley T

Studlar, ‘Tobacco Control Policy Instruments in a Shrinking World: How Much Policy Learning?’ (2006) 29

International Journal of Public Administration 367. 18 The influence of libertarianism and neoclassical economics has generally been discussed in public health

literature. See eg, Peter D Jacobson, ‘Changing the Culture of Health: One Public Health Misstep at a Time’

(2014) 51 Society 221; R S Magnusson, ‘Case Studies in Nanny State Name-calling: What Can We Learn?’ (2015)

129 Public Health 1074; Bryan Thomas and Lawrence O Gostin, ‘Tackling the Global NCD Crisis: Innovations

in Law and Governance’ (2013) 41 The Journal of Law, Medicine & Ethics 16. See also, Ha-Joon Chang, ‘An

Institutionalist Perspective on the Role of the State: Towards an Institutionalist Political Economy’ in Leonardo

Burlamaqui, Ana Célia Castro and Ha-Joon Chang (eds), Institutions and the Role of the State (Edward Elgar

Publishing, 2000) 3, 5, where the author discusses the linkages between neoclassical economics and Austrian-

libertarian philosophy. 19 For a useful overview, see Raymond Boudon, ‘Rational Choice Theory’ in Bryan S Turner (ed), The New

Blackwell Companion to Social Theory (John Wiley & Sons, 2009) 179; Herbert A Simon, ‘Theories of Decision-

making in Economics and Behavioural Science’ in Surveys of Economic Theory (Palgrave Macmillan UK, 1966)

1 <http://link.springer.com/chapter/10.1007/978-1-349-00210-8_1>. For a discussion of the limitations of rational

actor theory in the context of tobacco, see Anna V Song, Paul Brown and Stanton A Glantz, ‘When Health Policy

and Empirical Evidence Collide: The Case of Cigarette Package Warning Labels and Economic Consumer

Surplus’ (2014) 104 American Journal of Public Health e42. 20 Frank J Chaloupka, Ayda Yurekli and Geoffrey T Fong, ‘Tobacco Taxes as a Tobacco Control Strategy’ (2012)

21 Tobacco Control 172; Edith D Balbach and Richard B Campbell, ‘Union Women, the Tobacco Industry, and

Excise Taxes’ (2009) 37 American Journal of Preventive Medicine S121. 21 Richard Thaler and Cass Sunstein are leading theorists in this framing of consumption-control interventions.

See Richard H Thaler and Cass R Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness

(Yale University Press, 2008). 22 For more detail, see eg Rhys Jones, Jessica Pykett and Mark Whitehead, Changing Behaviours: On the Rise of

the Psychological State (Edward Elgar Publishing, 2013) 18, where the authors described a ‘nudge’ as acting on

‘predictable forms of irrational bias and error through forms of non-coercive suggestion’ based on behavioural

psychology and cognitive design.



policy intervention is no longer on providing a set of information to enable choice, but on

changing the context of choice’.23 The libertarian paternalist does not support outright bans on

particular products. However, this approach does support subtly paternalistic consumption-

control measures to influence decision-making.

A third way to regulate the behavioural risk factors of NCDs is to adopt a human rights-based

approach. Various human rights treaties recognise a right to a health,24 which implies a duty

on states to ‘provide an environment which facilitates the discharge’ of responsibilities

associated with the right to health.25 However, a rights-based approach to NCDs is less

developed or evident in the literature, in international policy guidance or in regulatory

interventions. For instance, NCD policy instruments developed by international institutions

tend to contain broad references to human rights without constructive advice about what such

an approach entails and how it could be implemented.26 This is illustrated in the international

Framework Convention on Tobacco Control,27 which reaffirms the human right to health and

the overarching duty of governments to protect public health in the foreword and preamble, but

does not weave this statement into its suggested framework for tobacco control.

Despite being an emerging area, it is possible to make some preliminary observations about

the form of a rights-based approach to regulating risk behaviours. To begin, a rights-based

model is more holistic than the previous two regulatory strategies. A rights-based approach

focuses on the root causes of the risk behaviours, that is, the underlying determinants to health,

which tend to centre on inequalities within and between societies on social, economic and

political levels.28 Such an approach is compatible with NCD prevention, as NCDs tend to be

more prevalent in low socio-economic groups.29 Thus, a rights-based approach to regulating

23 Alberto Alemanno, ‘Unpacking Plain Packaging and Other Standardization Requirements in Light of

Behavioural Sciences’ in Alberto Alemanno and Enrico Bonadio (eds), The New Intellectual Property of Health:

Beyond Plain Packaging (Edward Elgar Publishing, 2016) 15, 40. 24 See eg, International Covenant on Economic, Social and Cultural Rights, opened for signature 16 December

1966, 993 UNTS 3 (entered into force 3 January 1976) art 12; Convention on the Rights of the Child, opened for

signature 20 November 1989, 1577 UNTS 3 (entered into force 2 September 1990) art 24. 25 Committee on Economic, Social and Cultural Rights, ‘The Right to the Highest Attainable Standard of Health

(Art. 12)’, General Comment No 14, UN Doc E/C.12/2000/4, 11 August 2000, 5 [42]. 26 Laura Ferguson et al, ‘Non-Communicable Diseases and Human Rights: Global Synergies, Gaps and

Opportunities’ (2016) Global Public Health 1. 27 World Health Organization Framework Convention on Tobacco Control, signed 21 May 2003 (entered into

force 27 February 2005). 28 ‘Addressing the Social Determinants of Noncommunicable Diseases’ (Discussion Paper, United Nations

Development Program, 16 October 2013) <http://www.undp.org/content/undp/en/home/librarypage/hiv-

aids/discussion-paper--addressing-the-social-determinants-of-noncommu.html>. 29 L Kilander et al, ‘Education, Lifestyle Factors and Mortality from Cardiovascular Disease and Cancer: A 25-

Year Follow-up of Swedish 50-Year-Old Men’ (2001) 30 International Journal of Epidemiology 1119; Cate Burns,

‘A Review of the Literature Describing the Link between Poverty, Food Insecurity and Obesity with Specific

Reference to Australia’ (Literature Review, VicHealth, 2004) 1

<http://secondbite.org/sites/default/files/A_review_of_the_literature_describing_the_link_between_poverty_foo

d_insecurity_and_obesity_w.pdf>; Mark W Massing et al, ‘Income, Income Inequality, and Cardiovascular

Disease Mortality: Relations Among County Populations of the United States, 1985 to 1994’ (2004) 97 Southern

Medical Journal 475; Johan P Mackenbach et al, ‘Socioeconomic Inequalities in Health in 22 European Countries’

(2008) 358 New England Journal of Medicine 2468; Daniel Kim et al, ‘Is Inequality at the Heart of It? Cross-

Country Associations of Income Inequality with Cardiovascular Diseases and Risk Factors’ (2008) 66 Social

Science & Medicine 1719; Mariachiara Di Cesare et al, ‘Inequalities in Non-communicable Diseases and Effective

Responses’ (2013) 381 The Lancet 585. However, data on the correlations between inequalities and non-

communicable diseases is lacking in many low income countries, and some studies have not found a correlation:

Timothy S Laux et al, ‘Prevalence of Obesity, Tobacco Use, and Alcohol Consumption by Socioeconomic Status

among Six Communities in Nicaragua’ (2012) 32 Pan-American Journal of Public Health (Revista panamericana




risk behaviours for NCDs would be based on regulatory and other governance responses to

facilitate the realisation of other, health-related, human rights such as the rights to education,

shelter and fair wages.30

A rights-based approach also emphasises the state’s responsibility to protect citizens against

human rights abuses by third parties, including corporate actors.31 In this context, an example

of a human rights abuse committed by private actors may include the promotion of risk

commodities known to be detrimental to health, especially for vulnerable groups.32 The United

Nations Guiding Principles on Business and Human Rights33 observed that states should

consider ‘the full range of permissible preventative and remedial measures, including policies,

legislation, regulations and adjudication’ in order to protect their citizens against human rights

abuse by private actors. Arguably then, a rights-based approach is more likely to support

comparatively more onerous consumption-control measures for risk commodities and the

corporate actors that profit from them. These include, inter alia, restrictions on the availability

of sugar-sweetened beverages, taxation measures, gradually implemented bans on particular

products, significant or total reduction in marketing of risk commodities, especially those that

target vulnerable groups such as children, and reformulation requirements.34 To be consistent

with a rights-based approach, these more onerous restrictions must be employed in conjunction

with broader socio-economic interventions addressing inequities. Moreover, the right to health,

and other rights protected or facilitated by consumption-control measures would need to be

balanced against other human rights such as the right to liberty of the person.35

B Development of Consumption-control Measures

The relative successes of tobacco control have led to some tobacco control measures being

translated into schemes to address other NCD risk factors, namely unhealthy diets and alcohol

abuse.36 In reference to unhealthy dietary choices and tobacco use, Mercer et al observed:

‘[s]imilar psychological, social, and environmental factors as well as advertising pressures

influence the usage patterns of all. These similarities suggest that there may be commonalities

between factors involved in controlling obesity and tobacco’.37 This section will briefly outline

de salud publica) 217. 30 International Covenant on Economic, Social and Cultural Rights, opened for signature 16 December 1966, 993

UNTS 3 (entered into force 3 January 1976) arts 13, 11, 7. 31 Committee on Economic, Social and Cultural Rights, above n 25, 5 [42]; Olivier De Schutter, ‘The Right to an

Adequate Diet: The Agriculture–Food–Health Nexus’, Report of the Special Rapporteur on the Right to Food,

UN Doc A/HRC/16/49, (20 December 2010). 32 De Schutter, above n 31, 21 [42]. 33 United Nations Human Rights Council, Human Rights and Transnational Corporations and Other Business

Enterprises, UNHRC Res 17/4, 17th sess, Agenda Item 3, UN DOC A/HRC/RES/17/4 (16 July 2011) 6–7. 34 Allyn Taylor, Emily Parento and Laura Schmidt, ‘The Increasing Weight of Regulation: Countries Combat the

Global Obesity Epidemic’ (2015) 90 Indiana Law Journal 257

<http://www.repository.law.indiana.edu/ilj/vol90/iss1/7>; Belinda Reeve and Lawrence Gostin, Creating the

Conditions for People to Lead Healthy, Fulfilling Lives: Law Reform to Prevent and Control NCDs (Future

Leaders, 2015) <http://sro.library.usyd.edu.au:80/handle/10765/116351>. 35 International Covenant on Civil and Political Rights, opened for signature 16 December 1966, GA Res 2200A

(XXI) (entered into force 23 March 1976) art 9. 36 See eg, Jennifer L Pomeranz, ‘Sugary Beverage Tax Policy: Lessons Learned From Tobacco’ (2014) 104

American Journal of Public Health e13; Frank J Chaloupka and Patricia A Davidson, ‘Applying Tobacco Control

Lessons to Obesity: Taxes and Other Pricing Strategies to Reduce Consumption’ (Law Synopsis, Tobacco Control

Legal Consortium, 2010) <http://publichealthlawcenter.org/sites/default/files/resources/tclc-syn-obesity-

2010.pdf>. 37 Shawna L Mercer et al, ‘Possible Lessons from the Tobacco Experience for Obesity Control’ (2003) 77(4 Suppl)



the overarching trends in tobacco control, alcohol control and dietary-related regulations to

show how the regulation of these risk commodities has evolved in both different and similar

ways.

Tobacco use became widespread in the 20th century, as advances in technologies made the mass

production of cigarettes possible and as attitudes towards women smoking became more

accepting.38 In response to increasing scientific certainty about the adverse effects of tobacco

use, control measures began to be adopted from approximately the 1960s to the 1980s, and

centred on mandated disclosure and fiscal measures.39

Over time, tobacco control has expanded to encompass the context in which consumers access

and use tobacco. This is illustrated by the development of standardised packaging for tobacco

and the increasing number of places where smoking is banned.40 The trend towards more

interventionist control measures without prohibiting a product is aligned with a ‘libertarian

paternalist’ approach. More broadly, it reflects a willingness of states to increase and expand

regulatory measures relating to tobacco control.

Against the backdrop of a strong political willingness to regulate tobacco, consumption-control

measures for tobacco have been subject to comparatively more global coordination and

harmonisation than other risk commodities.41 This is evidenced by the FCTC, which, as already

noted, remains the only international legal instrument for action to prevent a lifestyle factor

that increases the risk of NCDs.42 This treaty provides a national and multilateral framework

for tobacco control measures with the aim of substantially reducing the prevalence of tobacco

use. To achieve these ends, the FCTC obligates states to strengthen or implement a range of

measures to reduce the consumption of tobacco products including, for instance, a restriction

or complete ban on the marketing of tobacco products.43

Alcohol and tobacco are behavioural risk factors for NCDs with common elements. Both are

addictive drugs that have significant commercial interests, disproportionate effects on

vulnerable groups and strong scientific evidence for the link between their consumption and

the risk of NCDs.44 Yet, some significant differences exist between the two, which has led to

less interventionist approaches to alcohol than tobacco. Unlike tobacco, alcohol has been

produced and consumed for thousands of years longer, it is embedded within religious rituals

and cultures, the adverse health impacts tend to be diverse and more long-term, and moderate

drinking appears to be relatively unharmful (or, according to some studies, even reduces the

The American Journal of Clinical Nutrition 1073S. 38 Allan Brandt, The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product that Defined

America (Basic Books, 2009) 57. 39 See eg, Heikki Hiilamo, Eric Crosbie and Stanton A Glantz, ‘The Evolution of Health Warning Labels on

Cigarette Packs: The Role of Precedents, and Tobacco Industry Strategies to Block Diffusion’ (2014) 23 Tobacco

Control e2. 40 Crawford Moodie et al, ‘Plain Tobacco Packaging: A Systematic Review’ (Report, Public Health Research

Consortium, 2012) <http://eprints.ioe.ac.uk/16381/>. 41 As illustrated, inter alia, by the WHO Framework Convention on Tobacco Control, above n 27. 42 Ibid. 43 Ibid art 13(4). 44 See eg, David Stuckler et al, ‘Manufacturing Epidemics: The Role of Global Producers in Increased

Consumption of Unhealthy Commodities Including Processed Foods, Alcohol, and Tobacco’ (2012) 9 PLoS

Medicine e1001235; Eric Gorovitz, James Mosher and Mark Pertschuk, ‘Preemption or Prevention? Lessons from

Efforts to Control Firearms, Alcohol, and Tobacco’ (1998) 19 Journal of Public Health Policy 36; DP Hackbarth

et al, ‘Collaborative Research and Action to Control the Geographic Placement of Outdoor Advertising of Alcohol

and Tobacco Products in Chicago.’ (2001) 116 Public Health Reports 558.




risk of some NCDs, although this is debated).45 Perhaps as a result of these factors, prohibitions

on alcohol from Russia, Norway, Iceland, Finland and the United States have generally been

considered as unsuccessful at preventing alcohol use.46 Moreover, tobacco has been subject to

decades of scientific investigation and activism, which has built strong public consensus that

tobacco use is harmful, whereas with alcohol use, there is less activism and significant research

gaps remain.47

Common measures of alcohol control include: minimum drinking ages; taxation and price

control; restrictions on marketing, and on locations, quality and types of alcohol that can be

consumed; and limitations on where, when and how many alcohol businesses can operate.48

Plain-packaging of alcohol products and complete bans on marketing are rare, unlike tobacco.

Casswell and Thamarangsi observed: ‘Packaging and labelling restrictions have not been

addressed for alcohol in the same way that they have for tobacco, but changes to labelling —

at least for alcohol strength and ingredients — will probably be introduced’.49 Consequently,

alcohol control has generally become more interventionist, but the measures adopted have

retained a higher freedom of choice than tobacco control measures. Alcohol control measures

often seem to sit somewhere between a completely libertarian approach and more paternalist

interventions.

Meanwhile, regulatory interventions aimed at influencing food and dietary choices, for

instance, have traditionally adopted a libertarian approach to regulatory design.50 National

dietary guidelines tend to act as the key regulatory tool for influencing diets with almost 90

states having national dietary guidelines aimed at educating consumers.51 Social marketing

campaigns are commonly used to communicate the advice contained in dietary guidelines, with

the objective of influencing dietary choices by disseminating information and evidence. The

45 David J Hanson, ‘Historical Evolution of Alcohol Consumption in Society’ in Peter Boyle et al (eds), Alcohol:

Science, Policy and Public Health (Oxford University Press, 2013) 31; Eric B Rimm et al, ‘Review of Moderate

Alcohol Consumption and Reduced Risk of Coronary Heart Disease: Is the Effect due to Beer, Wine, or Spirits?’

(1996) 312 British Medical Journal 731. There is debate regarding whether moderate alcohol consumption has

health benefits: see Kaye Middleton Fillmore et al, ‘Moderate Alcohol Use and Reduced Mortality Risk:

Systematic Error in Prospective Studies and New Hypotheses’ (2007) 17(5 Suppl) Annals of Epidemiology S16. 46 See eg, Jeffrey A Miron and Jeffrey Zwiebel, ‘Alcohol Consumption During Prohibition’ (Working Paper 3675,

National Bureau of Economic Research, April 1991) <http://www.nber.org/papers/w3675>; Toby Seddon, A

History of Drugs: Drugs and Freedom in the Liberal Age (Routledge, 2009) 70. In several countries, such as

Afghanistan and Saudi Arabia, alcohol is still prohibited for religious reasons: see eg, Laurence Michalak and

Karen Trocki, ‘Alcohol and Islam: An Overview’ (2006) 33 Contemporary Drug Problems 523. 47 Uwe Gneiting and Hans Peter Schmitz, ‘Comparing Global Alcohol and Tobacco Control Efforts: Network

Formation and Evolution in International Health Governance’ (2016) 31(suppl 1) Health Policy and Planning i98. 48 Esa Osterburg, ‘The Effects of Controlling Physical Availability of Alcohol’ in Peter Boyle et al (eds), Alcohol:

Science, Policy and Public Health (Oxford University Press, 2013) 361; Jon P Nelson and Amy D McNall,

‘Alcohol Prices, Taxes, and Alcohol-Related Harms: A Critical Review of Natural Experiments in Alcohol Policy

for Nine Countries’ (2016) 120 Health Policy 264. 49 Sally Casswell and Thaksaphon Thamarangsi, ‘Reducing Harm from Alcohol: Call to Action’ (2009) 373 The

Lancet 2247, 2254. 50 See eg, Jana Sisnowski, Elizabeth Handsley and Jackie M Street, ‘Regulatory Approaches to Obesity

Prevention: A Systematic Overview of Current Laws Addressing Diet-related Risk Factors in the European Union

and the United States’ (2015) 119 Health Policy 720; Christina A Roberto et al, ‘Patchy Progress on Obesity

Prevention: Emerging Examples, Entrenched Barriers, and New Thinking’ (2015) 385 The Lancet 2400. 51 Food and Agriculture Organization of the United Nations, Food-based Dietary Guidelines (2017)

<http://www.fao.org/nutrition/education/food-dietary-guidelines/home/en/>.



requirement that nutritional information be displayed on packaged foods is another, common

way to inform consumers.52

States have increasingly considered and introduced a range of regulatory measures that seek to

influence dietary choices more significantly. In part, this trend is a response to growing

evidence that the libertarian approach of only providing consumers with information to make

choices in their interest has been relatively ineffective.53 The measures adopted include

marketing bans on ultra-processed food, taxes on particular foods (eg soft drinks) or attributes

(eg sugar content), front-of-pack nutrition labelling schemes, regulating food manufacturing

and product reformulation (eg prohibition on the addition of salt to particular foods) and

restrictions on the availability of particular food (eg zoning limits on the number of fast food

places in particular areas).54 In addition, some states have responded to calls for sustainable

dietary interventions, that is, measures that exploit the synergies between foods that have a low

environmental impact and human health and nutritional requirements.55

Unlike tobacco and alcohol, regulatory interventions that tax or that require the reformulation

of a food product have only been adopted, sometimes unsuccessfully, by a small handful of

states.56 Regardless, the larger range of regulatory interventions to influence diets that have

been considered or implemented over the last decade reflect a general shift towards increased

regulation to influence dietary change. The overarching trend in recent years has been towards

using regulatory interventions to influence consumer choices, which is mirrored and supported

by the concept of libertarian paternalism. The next section considers whether international

investment law poses a threat to this (admittedly gradual and general) progress on regulating

for the prevention of NCDs.

II FRICTION BETWEEN INTERNATIONAL INVESTMENT LAW AND THE ADOPTION OF

CONSUMPTION-CONTROL MEASURES

A Overview of International Investment Law

International investment law emerged from, and remains centred on, protections for foreign

investors against state interference. From the post-colonial era onwards, states have

increasingly developed norms to assure protections for foreign investors against arbitrary state

interference. These norms have been referred to as the international minimum standard of

52 M Cecchini and L Warin, ‘Impact of Food Labelling Systems on Food Choices and Eating Behaviours: A

Systematic Review and Meta-analysis of Randomized Studies’ (2016) 17 Obesity Reviews 201. 53 See, eg, Walter Wymer, ‘Rethinking the Boundaries of Social Marketing: Activism or Advertising?’ (2010) 63

Journal of Business Research 99; VEPP Lemmens et al, ‘A Systematic Review of the Evidence Regarding

Efficacy of Obesity Prevention Interventions among Adults’ (2008) 9 Obesity Reviews 446; M Stead, G Hastings

and L McDermott, ‘The Meaning, Effectiveness and Future of Social Marketing’ (2007) 8 Obesity Reviews 189;

Lawrence M Wallack, ‘Mass Media Campaigns: The Odds Against Finding Behavior Change’ (1981) 8 Health

Education & Behavior 209. 54 See eg, David M Studdert, Jordan Flanders and Michelle M Mello, ‘Searching for Public Health Law’s Sweet

Spot: The Regulation of Sugar-sweetened Beverages’ (2015) 12 PLOS Medicine e1001848; Paolo R Vergano and

Blanca Salas Ferrer, ‘Taxing and Marketing Restrictions of “Foods High in Fat, Salt or Sugar” in the EU’ (2016)

7 European Journal of Risk Regulation 597. Note however, the critique from Gyorgy Scrinis and Christine Parker,

‘Front-of-Pack Food Labeling and the Politics of Nutritional Nudges’ (2016) 38 Law & Policy 234, regarding the

accuracy and effectiveness of current approaches to food labelling. 55 See eg, Barbara Burlingame and Sandro Dernini (eds), Sustainable Diets and Biodiversity: Directions and

Solutions for Policy, Research and Action (Food and Agriculture Organization, 2010). 56 Sisnowski, Handsley and Street, above n 50; Malene Bødker et al, ‘The Rise and Fall of the World’s First Fat

Tax’ (2015) 119 Health Policy 737.




treatment for aliens.57 Yet it was not until the later part of the 20th century that international

investment law started to develop rapidly.58 As liberal economic policies became predominant

in the 1980s, states began rapidly entering into increasingly detailed bilateral and multilateral

investment agreements.59 Indeed, the number of international investment agreements has

grown from approximately 500 in 1988 to over 3000 in 2014.60 Now, the primary sources of

international investment law are the substantive rules of international investment agreements

(bilateral investment treaties and investment provisions in free trade agreements) and the

decisions, interpretations and applications of these substantive rules by investment treaty

tribunals. These sources of international investment law, along with customary international

investment law, create standards for the treatment of foreign investors as well as specific norms

regarding expropriation and dispute resolution.

In relation to standards of treatment, an investor’s right to fair and equitable treatment by the

host state is one of the most common standards imposed via investment treaties.61 Yet, a shared

formulation of ‘fair and equitable treatment’ does not exist.62 There is some suggestion from

tribunals, other international institutions, and scholars that, depending on the context and the

relevant provision, the following conduct can formulate a breach of the standard: clearly

unequal treatment such as treatment that is significantly counter to rule of law principles;

discriminatory treatment; or treatment that is grossly inconsistent with due process.63

Regardless, the fragmented way in which international investment law develops and is

implemented has led to a significant amount of ambiguity and inconsistency surrounding the

interpretation of the right to fair and equitable treatment.

Specific norms relating to expropriation apply in situations where a state wishes to directly

expropriate an investor’s property rights. Expropriation norms were generally created to deal

with situations where a state directly takes the title or possession of an investor’s property.

57 Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law (Oxford University Press,

2nd ed, 2012) ch 1. Note there is debate about the extent to which principles considered to be customary

international investment law principles are in fact customary. As Professor Sornarajah observed ‘General

principles of law are a weak source of international law. Their weakness is accentuated by the common tendency

to select a proposition from a few national systems and argue that they constitute a general principle, which should

be treated as international law. Thereafter, like-minded scholars seek to achieve this conversion through constant

repetition. This is a phenomenon which frequently occurs in international investment law’: M Sornarajah, The

International Law on Foreign Investment (Cambridge University Press, 2010) 418. 58 See eg, Barcelona Traction, Light and Power Company Limited (Belgium v Spain) (Preliminary Objections)

[1970] ICJ Rep 3, 48 [89] where the ICJ observed that, in relation to international investment law ‘it may at first

sight appear surprising that the evolution of law has not gone further and that no generally accepted rules in the

matter have crystallized on the international plane.’ 59 World Trade Organization, World Trade Report 2013: Factors Shaping the Future of World Trade (2013) 76–

8 <https://www.wto.org/english/res_e/publications_e/wtr13_e.htm>. Michael Gast and Roland Herrmann,

‘Determinants of Foreign Direct Investment of OECD Countries 1991–2001’ (2008) 22 International Economic

Journal 509; United Nations Conference on Trade and Development, Investment Policy Hub (2017)

<http://investmentpolicyhub.unctad.org/IIA>. 60 ‘Recent Trends in IIAS and ISDS’ (Issues Note No 1, United Nations Conference on Trade and Development,

February 2015) 2 <http://unctad.org/en/PublicationsLibrary/webdiaepcb2015d1_en.pdf>. 61 See eg, Jeswald W Salacuse, The Three Laws of International Investment: National, Contractual, and

International Frameworks for Foreign Capital (Oxford University Press, 2013) 384. 62 See eg, ‘Fair and Equitable Treatment’ (UNCTAD/ITE/IIT/11 (Vol III), United Nations Conference on Trade

and Development, 1999) <http://unctad.org/en/Docs/psiteiitd11v3.en.pdf>. 63 Waste Management Inc v United Mexican States (Award) (ICSID Arbitral Tribunal, Case No ARB(AF)/003/3,

30 April 2004); Alex Genin, Eastern Credit Limited Inc and AS Baltoil (US) v Republic of Estonia (Award) (ICSID

Arbitral Tribunal, Case No ARB/99/2, 25 July 2001) [367]; see also Kenneth J Vandevelde, ‘A Unified Theory

of Fair and Equitable Treatment’ (2010) 106 International Law and Politics 43.



Since the 1960s onwards, norms regarding expropriation have generally applied to indirect

forms of expropriation where a state regulates in a way that affects the investor’s property to

the extent that it is the equivalent of a physical taking.64 This shift was due to a general

expansion of the concept of property, and the increased precision of rights and obligations that

international investment treaties provide in comparison to customary international law.65

Regardless of whether the expropriation is direct or indirect, an expropriation must be non-

discriminatory and for a public purpose.66 In addition, the host state must provide appropriate

compensation to the investor.67

In relation to dispute resolution norms, bilateral investment treaties (‘BITs’) and multilateral

free trade agreements have increasingly granted foreign investors the right to directly challenge

a host state’s policy or other regulatory intervention. Such actions involve a foreign investor

claiming in an international arbitration forum that a host state directly or indirectly expropriated

their property.

These aspects of international investment law, that is, the establishment of the fair and equitable

treatment obligation, the expanded understandings of expropriation and the development of

ISDS clauses, are not simply a restatement of customary norms relating to investor

protections.68 Rather, they represent an evolution in international investment law in a direction

that has substantially increased the scope of protections for investors. These developments have

fueled significant concerns that international investment law is curtailing the regulatory space

required by states to adopt, inter alia, measures to protect public health.

A host state’s regulatory interventions to influence consumption choices could substantially

impact on the value of an investment to the extent that enacting the regulation is considered an

indirect expropriation of the foreign investor’s property. Alternatively, a host state may enact

particularly onerous laws targeting risk commodities, in line with a libertarian-paternalist or a

rights-based approach. Strict consumption-control measures could form the basis of an ISDS

challenge where the investor argues that the host state breached its obligation to provide the

investor with fair and equitable treatment by enacting the consumption-control measures. Even

if a regulatory intervention was legitimately for and proportionate to decreasing risk behaviours

linked to NCDs, it could still form the basis of an investor claim against a host state.

Moreover, a host state’s perceived threat of such an action eventuating is suspected of having

a chilling effect on the introduction of new measures for the prevention of NCDs.69 Referred to

64 Libyan American Oil Company (LIAMCO) v The Government of the Libyan Arab Republic (1977) Ad Hoc

Tribunal, Draft Convention on Arbitral Procedure, 103–4, where the tribunal broadened the emphasis in customary

law on tangible property to discuss intangible property as ‘those rights that had a pecuniary or monetary value’. 65 See eg, Rudolf Dolzer, ‘Indirect Expropriations: New Developments?’ (2002) 11 New York University

Environmental Law Journal 64. 66 These requirements are based in customary law, but have been reaffirmed in United Nations Declaration on

Permanent Sovereignty over Natural Resources, GA Res 1803 (XVII)/17 UN GAOR Supp (No 17), UN Doc

A/5217, 17th sess, 1194th plen mtg (14 December 1962). Note also, OECD’s overview ‘Policy Framework for

Investment’ (Ministerial Council Meeting, OECD, 6 April 2015) 25

<https://www.oecd.org/investment/toolkit/policyareas/investmentpolicy/expropriationlawsandreviewprocesses.h

tm>. 67 United Nations Declaration on Permanent Sovereignty over Natural Resources, above n 66. 68 Surya P Subedi, International Investment Law: Reconciling Policy and Principle (Bloomsbury Publishing,

2016) 2. 69 Kyla Tienhaara, ‘Regulatory Chill and the Threat of Arbitration: A View from Political Science’ in Chester

Brown and Kate Miles (eds), Evolution in Investment Treaty Law and Arbitration (Cambridge University Press,

2011) 606; Julia G Brown, ‘International Investment Agreements: Regulatory Chill in the Face of Litigious Heat’




as the regulatory chill hypothesis, the suggestion is that ISDS mechanisms cause governments

to stall, amend or abandon regulatory interventions in the public interest to avoid disputes with

private actors.70 In fact, the Special Rapporteur on the Right to Health suggested that

international investment law has allowed ‘[t]ransnational corporations to reduce States’ policy

space and have been instrumental in increasing the influence of transnational corporations on

States’ ability to institute public health policies...’.71 Similarly, Dr Margaret Chan, the Director-

General of the WHO, described tobacco companies bringing of investment disputes in relation

to tobacco control measures as ‘deliberately designed to instill fear in countries wishing to

introduce similarly tough tobacco control measures’.72 Chan’s comment suggests that a single

case concerning tobacco control measures could have broad impacts on the development of

more onerous consumption-control measures worldwide. Despite these claims, it remains

notoriously hard to prove or disprove whether ISDS has affected state decision-making on

whether to introduce a particular measure to prevent NCDs.73

More broadly, ISDS raises questions about whether international investment arbitration

tribunals are the appropriate forum to deal with complex matters of public interest. The

applicable rules for ISDS depend on the investment agreements between the host and home

states. Generally, an agreement will adopt the body of rules developed by the UN Commission

on International Trade Law (‘UNCITRAL’) or the International Centre for the Settlement of

Investment Disputes (‘ICSID’). Following the consent of parties, these rules are implemented

by tribunals formed under these institutions. Thus, ISDS involve tribunals of differing

compositions, potentially under different bodies of rules.

The potential for these characteristics to give rise to inconsistent decisions is aggravated by the

fact that settled, uniform rules on the persuasiveness of previous cases have not been created,

and ISDS mechanisms lacks appeal processes to correct legal or significant factual errors.74

Inconsistent decisions under ISDS occur in cases with similar facts but a different application

of the law, across cases concerning the same investment treaty provisions.75 The cases of CME

v Czech Republic and Lauder v Czech Republic arbitrations are a classic example of this

practice and the issues that arise from it.76 The cases concerned the same Czech Republic

government interference with media licences, and were both subject to UNCITRAL rules.

Despite the similarities, in 2001 the Czech Republic was successful in opposing Lauder’s

claims of expropriation, but in 2003 was ordered to pay a substantial compensation to CME

(2013) 3 Western Journal of Legal Studies [i]. See also, Arthur W Rovine, Contemporary Issues in International

Arbitration and Mediation: The Fordham Papers 2014 (BRILL, 2015). 70 Ronald Labonte and Matthew Sanger, ‘Glossary on the World Trade Organization and Public Health: Part 2’

(2006) 60 Journal of Epidemiology & Community Health 738; Chester Brown and Kate Miles, Evolution in

Investment Treaty Law and Arbitration (Cambridge University Press, 2011) 608–9. 71 Anand Grover, ‘Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental

Health’, UN Doc A/69/299 (11 August 2014) 15 [48]. 72 Margaret Chan, ‘The Changed Face of the Tobacco Industry’ (Keynote address at the 15th World Conference

on Tobacco or Health, Singapore, 22 March 2012)

<http://www.who.int/mediacentre/news/releases/2012/tobacco_20120322/en/>. 73 Jonathan Bonnitcha, Substantive Protection under Investment Treaties: A Legal and Economic Analysis

(Cambridge University Press, 2014) 115–29. 74 See eg, Karl P Sauvant, Appeals Mechanism in International Investment Disputes (Oxford University Press,

2008). 75 For a good discussion on this point, see Susan D Franck, ‘The Legitimacy Crisis in Investment Treaty

Arbitration: Privatizing Public International Law through Inconsistent Decisions’ (2004) 73 Fordham Law Review

1521. 76 CME Czech Republic BV (The Netherlands) v The Czech Republic (Final Award) (2003) UNCITRAL; Ronald

S Lauder v The Czech Republic (Final Award) (2001) UNCITRAL.



for expropriation. A legal regime where oppositional decisions exist together at the same time,

coupled with a lack of appeal avenues to rectify errors, is contrary to the legal consistency,

fairness and predictability required by rule of law and justice principles.77 This raises serious

questions about whether ISDS mechanisms are the appropriate forum for hearing complex

matters that are of public interest as well as private matters.

Regardless of the rules that apply, international investment arbitration procedures are based on

domestic commercial arbitration models that are confidential and customisable to parties’

needs. As a result, disputes heard under UNCITRAL or ICSID have varying degrees of

confidentiality and the granting of public access to decisions requires the consent of all

parties.78 This lack of public oversight, and specifically the limited access to award decisions,

would be unacceptable in domestic courts that are complying with the rule of law.

Two other examples of procedural issues with ISDS raise doubts about the appropriateness of

referring matters of public interest to ISDS. Firstly, arbitrators are appointed by the parties to

the dispute, and commentators have generally considered the conflict of interest standards to

be inadequate and minimal.79 Secondly, substantial costs are often incurred in resolving

investor-state disputes. The United Nations Conference on Trade and Development

(‘UNCTAD’) found that the average legal fees and tribunal expenses in 2013 exceeded

US$8 million for each party per case.80 For host countries, the overall costs include the

potential of having to pay compensation and the costs involved in carrying out the arbitration

(eg legal expenses and arbitration costs).81 Salacuse identifies a third cost, which is that ‘a

substantial award to the investor may require the host country to repeal or modify measures

that were implemented for the public good’.82

Non-party states may also incur opportunity costs as a result of another host state’s

consumption-control measures being challenged under ISDS. Where a state does not adopt a

particular regulatory intervention to avoid being subject to ISDS claims, they risk incurring

significantly more economic costs from NCDs (eg due to a macro-economic loss of

productivity).83 In other words, the opportunity to prevent NCDs by adopting more restrictive

consumption-control measures may not be taken, which in turn may increase the incidence of

and costs associated with NCDs.

77 See eg, Brian Tamanaha, ‘A Concise Guide to the Rule of Law’ in Gianluggi Palombella and Neil Walker (eds),

Relocating the Rule of Law (Hart Publishing Limited, 2008). 78 See eg, Alexis C Brown, ‘Presumption Meets Reality: An Exploration of the Confidentiality Obligation in

International Commercial Arbitration’ (2000) 16 American University International Law Review 969. 79 Allen S Weiner, ‘Indirect Expropriations: The Need for a Taxonomy of Legitimate Regulatory Purposes’ (2003)

5 International Law FORUM Du Droit International 166; Omar Chehade, ‘The Evolution of the Law of Indirect

Expropriation and Its Application to Oil and Gas Investments’ (2016) 9 Journal of World Energy, Law & Business

64; James D Fry and Juan Ignacio Stampalija, ‘Forged Independence and Impartiality: Conflicts of Interest of

International Arbitrators in Investment Disputes’ (2014) 30 Arbitration International 189. 80 United Nations Conference on Trade and Development, World Investment Report 2013: Global Value Chains:

Investment and Trade for Development (2013) 112 <http://unctad.org/en/PublicationsLibrary/wir2013_en.pdf>. 81 See eg, Susan D Franck, ‘Rationalizing Costs in Investment Treaty Arbitration’ (2011) 88 Washington

University Law Review 769. 82 Jeswald Salacuse, ‘Is There a Better Way? Alternative Methods of Treaty-based, Investor–State Dispute

Resolution’ (2007) 31(1) Fordham International Law Journal 138, 146. 83 See,eg, D E Bloom et al, The Global Economic Burden of Non-communicable Diseases (World Economic

Forum, 2011) <http://apps.who.int/medicinedocs/documents/s18806en/s18806en.pdf>, where an argument is

made for an increased investment in NCD prevention to reduce the economic burden of NCDs.




Due to their existing resource constraints, low and middle income countries are likely to be

disproportionately affected and threatened by the financial costs of arbitration to the extent that

they may wish to avoid contesting an arbitral claim and instead concede to investor demands.84

However, it is hard (if not impossible) to predict and prove that ISDS could have such a great

chilling effect that it would prevent the development of effective measures to reduce NCDs

and thus increase the economic burden of NCDs for particular countries.

B Limitations of Drawing Lessons for Other Risk Commodities from ISDS Cases

Concerning Tobacco

Tobacco is arguably easier to regulate than the other key risk commodities: unhealthy food

products and alcohol. The consumption of ultra-processed, nutritionally-poor foods, as well as

alcohol, forms part of social events, epicureanism and culture in a far more heavily entrenched

way than tobacco. Because of these factors, stronger measures to influence diets or lessen

alcohol abuse may have to meet a higher threshold to be considered legitimate and

proportionate public health measures. The food industry, in particular, is far more diverse and

multifaceted than the tobacco or alcohol industries. Brownell and Warner observed:

The food industry is more complex than tobacco, with scores more players and thousands more

products. Some companies, such as fruit and vegetable sellers, promote inherently good

products, while some like the candy companies do the opposite. Most companies, especially

the major players such as Nestlé, Unilever, and Kraft (the world’s three largest food

companies), do a great deal of both.85

The difference between food as an essential human need and drugs like alcohol and tobacco,

as well as the complexity of the food industry and diversity of products, suggests that

consumption-control measures related to diets will be more difficult to introduce. Furthermore,

the concentration within the food sector suggests that some companies are especially well-

placed to frustrate efforts to influence diets, including by referring a matter to ISDS.86

A final point relates to ‘tobacco exceptionalism’, which is the notion that tobacco is uniquely

toxic in nature and requires exceptional policy responses. The carveouts for tobacco in

negotiated agreements beginning with the Trans-Pacific Partnership Agreement are reflective

of tobacco exceptionalism. These carveouts partially or completely prevent investors from

bringing claims in respect of tobacco control measures under the investment agreement’s ISDS

clause.87 However, tobacco carveouts do not necessarily prevent a state challenging another

state under an investment treaty in relation to tobacco control measures.

Similar carveouts for alcohol and particular food products have not been developed, which

means that diet- and alcohol-control related measures can be subject to ISDS mechanisms

84 See eg, Alfred-Maurice de Zayas (Independent Expert), ‘Promotion of a Democratic and Equitable

International Order’ (Human Rights Council, UN Doc A/70/285, 5 August 2015)

<http://www.refworld.org/docid/55f28f2e4.html> [41]. 85 Kelly D Brownell and Kenneth E Warner, ‘The Perils of Ignoring History: Big Tobacco Played Dirty and

Millions Died. How Similar Is Big Food?’ (2009) 87 The Milbank Quarterly 259, 285. 86 See eg, Sophia Murphy, ‘Globalization and Corporate Concentration in the Food and Agriculture Sector’ (2008)

51 Development 527. 87 Robert Ireland, ‘The Trans-Pacific Partnership Tobacco Carve-out Precedent’ (2016) 11 Global Trade and

Customs Journal 165. Note, Australia and Singapore amended their BIT to introduce a tobacco carveout.

Singapore-Australia Free Trade Agreement, signed 17 February 2003 (entered into force 28 July 2003) art 22

‘Tobacco Control Measures’.



under any applicable investment treaty. It seems narrow and inconsistent to apply this

exceptionalism for tobacco, and not the two other key risk commodities. In regard to alcohol,

Hawkins and Holden argued:

[a]lcohol is extremely harmful causing an estimated 3.3 million deaths per year (5.9% of global

mortality), versus 5.4 million deaths per year (8% of global mortality) for tobacco, and is

associated with a range of wider social harms. Whilst tobacco may be uniquely harmful, the

differences in harm do not appear to provide sufficient rationale for such radically different

policy approaches.

Meanwhile, around 16 million disability-adjusted life years,88 and 1.7 million deaths

worldwide are attributable to diets low in fruit and vegetable consumption,89 and an estimated

minimum of 2.6 million people die each year from being overweight or obese.90 While tobacco

is exceptional in that it kills up to one half of its regular users, it is clearly not the only risk

commodity significantly contributing to NCDs. Additionally, studies indicate at a population

level that the use of tobacco corresponds with the uptake of unhealthy diets and alcohol abuse.91

This suggests that a more systemic, and coherent approach to consumption-control is required,

including general carveouts to preserve public policy space for consumption-control

measures.92

III PHILIP MORRIS ASIA LTD V AUSTRALIA: POTENTIAL IMPLICATIONS FOR TREATY SHOPPING

TO CHALLENGE NCD PREVENTION MEASURES

A Australia’s Tobacco Plain Packaging Laws

The dispute between Philip Morris Asia Ltd and Australia began when the federal government

in Australia passed the Tobacco Plain Packaging Act 2011 (Cth). The stated objectives of the

Act include to ‘improve public health’ by discouraging tobacco use.93 It seeks to achieve this

goal by regulating the retail packaging and appearance of tobacco products with the aim of

reducing the appeal of tobacco products to consumers, increasing the effectiveness of health

warnings and reducing the ability of such marketing to mislead consumers about the harmful

effects of smoking.94

The Tobacco Plain Packaging Act sets out a number of requirements for how tobacco products

must be packaged, including that the boxes must have a matte finish, only employ a ‘drab dark

brown’ colour, not have any decorative ridges or other embellishments, only provide the

company name once across one line, and must not display any trade mark.95 With this

legislation, Australia seemingly removed the final avenue open to tobacco companies to

advertise their products to consumers.

88 This refers to the overall productive years lost due to premature ill-health, disability or death. 89 World Health Organization, above n 5, 20. 90 ‘Obesity and Overweight’ (World Health Organization, Fact Sheet No 311, May 2014)

<http://www.who.int/mediacentre/factsheets/fs311/en/>. 91 P Batel et al, ‘Relationship between Alcohol and Tobacco Dependencies among Alcoholics Who Smoke’ (1995)

90 Addiction 977; Mark B Reed et al, ‘The Relationship between Alcohol Use and Cigarette Smoking in a Sample

of Undergraduate College Students’ (2007) 32 Addictive Behaviors 449; Mimi Nichter et al, ‘Smoking and

Drinking among College Students: “It's a Package Deal”’ (2010) 106 Drug and Alcohol Dependence 16. 92 This point is expanded upon in Jeff Collin, ‘Tobacco Control, Global Health Policy and Development: Towards

Policy Coherence in Global Governance’ (2012) 21 Tobacco Control 274. 93 Tobacco Plain Packaging Act 2011 (Cth) s 3(1). 94 Ibid s 3(2). 95 Ibid ss18–26.




Certainly, Australia’s plain packaging laws represent more of a libertarian paternalist approach

as the context in which consumers are buying and making choices about tobacco has been

altered more so than, for instance, an informational campaign.96 At the same time, the

introduction of plain packaging laws is consistent with a rights-based approach; Australia is

facilitating healthy environments and protecting citizens from actions of third parties that

interfere with the right to health, that is, the use of marketing on packaging to promote the

purchase and consumption of tobacco. Empirical evidence supports the notion that plain

packaging laws contribute to the realisation of the right to health. An earlier empirical study

found that those Australians smoking from plain packs perceive their cigarettes to be less

satisfying; they were also more likely to have considered quitting at least once in the previous

week and placed quitting as a higher priority.97 Furthermore, the smoking cessation helpline,

Quitline, has experienced a prolonged 78 per cent increase in calls following the introduction

of plain packaging.98

B Parties’ Arguments

As the Australian government was working towards the Tobacco Plain Packaging Act in 2011,

Philip Morris’s Hong Kong affiliate, Philip Morris Asia Ltd (‘PM Asia’), acquired the

Australian Philip Morris subsidiary. On the same day as the plain packaging laws were passed,

PM Asia brought an action against Australia under the Agreement between the Government of

Hong Kong and the Government of Australia for the Promotion and Protection of Investments

(‘1993 Hong Kong–Australia BIT’),99 and commenced arbitration proceedings in the

Permanent Court of Arbitration.100 In addition to bringing an action under ISDS mechanisms,

which is the focus of this article, Philip Morris unsuccessfully challenged the constitutionality

of the plain packaging laws.101 Further challenges to the laws were brought by several countries

under the WTO’s dispute resolution mechanisms. At the time of writing, the outcome of the

WTO dispute has not officially been released.

The company’s ISDS claim was that the new plain packaging laws expropriated their

intellectual property rights and transformed their tobacco products from a branded product to

a commoditised product. The company argued that these actions amounted to an indirect

96 Alemanno, above n 23, 40. 97 Melanie A Wakefield et al, ‘Introduction Effects of the Australian Plain Packaging Policy on Adult Smokers:

A Cross-Sectional Study’ (2013) 3 BMJ Open e003175. 98 Jane M Young et al, ‘Association between Tobacco Plain Packaging and Quitline Calls: A Population-based,

Interrupted Time-Series Analysis’ (2014) 200 Medical Journal of Australia

<https://www.mja.com.au/journal/2014/200/1/association-between-tobacco-plain-packaging-and-quitline-calls-

population-based?0=ip_login_no_cache%3Dbb60e035818eaa3baa6525c47f4b7dd5>. 99 Agreement between the Government of Australia and the Government of Hong Kong for the Promotion and

Protection of Investments, signed 15 September 1993, [1993] ATS 30 No. 30 (entered into force 15 October 1993)

art 10, which states ‘A dispute between an investor of one Contracting Party and the other Contracting Party

concerning an investment of the former in the area of the latter which has not been settled amicably, shall, after a

period of three months from written notification of the claim, be submitted to such procedures for settlement as

may be agreed between the parties to the dispute. If no such procedures have been agreed within that three-month

period, the parties to the dispute shall be bound to submit it to arbitration under the Arbitration Rules of the United

Nations Commission on International Trade Law as then in force. The arbitral tribunal shall have power to award

interest. The parties may agree in writing to modify those Rules’. 100 Philip Morris Asia Limited (Hong Kong) v The Commonwealth of Australia (Award on Jurisdiction and

Admissibility) (Permanent Court of Arbitration, No 2012–12, 17 December 2015) (‘PMA v Australia’). Note, the

Permanent Court of Arbitration is an inter-governmental organization that provides dispute resolution mechanisms

for international dispute resolution. 101 JT International v Commonwealth (2012) 250 CLR 1.



expropriation by significantly devaluing PM Asia’s investments in Australia. The company

sought an award of damages ‘of the order of billions of Australian dollars’ with compound

interest, or withdrawal of the plain packaging laws.102

The Australian government defended its introduction of plain packaging laws.103 In its response

to the Notice of Arbitration in 2011, Australia stated:

The plain packaging legislation forms part of a comprehensive government strategy to reduce

smoking rates in Australia. This strategy is designed to address one of the leading causes of

preventable death and disease in Australia…. The implementation of these measures is a

legitimate exercise of the Australian Government’s regulatory powers to protect the health of

its citizens.104

Australia raised several jurisdictional objections, and the following will focus on the two most

relevant for the scope of this article. In the first instance, Australia asserted that the dispute

arose before PM Asia had a controlling interest in the Australian company, as Australia

announced its intentions to introduce plain packaging legislation before PM Asia acquired the

Australian firm.105 Alternatively, Australia argued that PM Asia’s investment in the Australian

firm of Philip Morris amounted to an abuse of process because PM Asia restructured its

investment with the purpose of bringing a claim against Australia.106

PM Asia defended its corporate restructuring by arguing that restructuring investments to

benefit from BIT protection was a common business practice, and that, as the investor, it

enjoyed a presumption of good faith.107 In the context of ISDS, ‘treaty-shopping’ generally

occurs where two states, country A and country B, have a BIT that has an ISDS clause.108 An

investor from a third country wants to challenge a measure brought in by country B. To do this,

the investor can incorporate in country A and challenge measures under the rights and

guarantees provided for by the BIT between country A and country B. Thus, PM Asia is right

in suggesting that their restructuring to take advantage of the BIT between Hong Kong and

Australia is common practice. Treaty-shopping tends to increase the legal uncertainties present

in ISDS; it may enhance a state’s perceived threat of a measure being subject to a ISDS

challenge; and it allows for abuse of the investment law system if committed in bad faith.109

Arbitral tribunals have generally held that re-structuring to benefit from an investment

agreement can be legitimate or, if the context supports it, may be an abuse of process.110

There was a long-running procedural dispute between Australia and Philip Morris that led to a

large number of procedural decisions. In Procedural Order No 8, the Tribunal decided to divide

102 Ibid 2 [8]. 103 Philip Morris Asia Limited Claimant and The Commonwealth of Australia Respondent, Australia’s Response

to the Notice of Arbitration under the 2010 Arbitration Rules of the United Nations Commission on International

Trade Law (21 December 2011)

<https://www.ag.gov.au/Internationalrelations/InternationalLaw/Pages/Tobaccoplainpackaging.aspx >. 104 Ibid 1. 105 PMA v Australia (Permanent Court of Arbitration, No 2012–12, 17 December 2015) 43–4. 106 Ibid 91 [351]. 107 Ibid 176 [570]. 108 See eg, Jonathan Klett, ‘National Interest vs Foreign Investment — Protecting Parties through ISDS

Comments’ (2016) 25 Tulane Journal of International and Comparative Law 213, 223–4. 109 See eg, Jorun Baumgartner, Treaty Shopping in International Investment Law (Oxford University Press, 2016)

ch 2. 110 See eg, Pacific Rim Cayman LLC v Republic of El Salvador (Decision on the Respondent’s Jurisdictional

Objections) (ICSID Arbitral Tribunal, Case No. ARB/08/12, 1 June 2012) [2.99].




the dispute into two and to begin by considering Australia’s preliminary objections concerning

jurisdiction separately from the other claims. Subsequently, on 18 December 2015, the

arbitration tribunal issued a unanimous decision.

C Findings and Potential Implications for Other NCD-prevention Measures

The Tribunal rejected Australia’s argument that the dispute arose when Australia announced

its plans to introduce plain packaging, and therefore before PM Asia restructured to take

advantage of the BIT between Hong Kong and Australia. Instead, the Tribunal agreed with PM

Asia that the dispute arose on the date that the plain packaging laws were passed. Since PM

Asia’s investment had occurred a few months before the laws were passed, no jurisdictional

issues were present when the dispute arose.111 In other words, the Tribunal focused on the

timing of the particular actions that breached the BIT (the passing of the laws), and not the

broader context of the dispute, which began with Australia’s announcement of an intention to

introduce standardised packaging laws.

Nonetheless, the Tribunal agreed with Australia that PM Asia’s claim was an abuse of process.

On the basis of the evidence presented, the Tribunal was convinced PM Asia acquired the

Australian subsidiary, Philip Morris (Australia) Limited, for the purpose of initiating

arbitration under the Hong Kong Agreement to challenge Australia’s tobacco plain packaging

laws. The Tribunal agreed with previous arbitral decisions by drawing a distinction between

legitimate re-structuring and re-structuring for abuse of process. This distinction is based on

whether the dispute was reasonably foreseeable at the time when the investor re-structured their

companies. While the Tribunal considered various tests for foreseeability used by other arbitral

bodies, it interpreted a dispute as foreseeable where there is a ‘reasonable prospect…that a

measure which may give rise to a treaty claim will materialise’.112

In application to the dispute at hand, the Tribunal noted that the Australian government began

indicating that it would consider introducing plain packaging measures in 2008. Subsequently,

in 2009 Philip Morris had sought legal advice about the plain packaging, and wrote a letter to

the Health Minister protesting plain packaging laws. In 2010, various public officials, including

the then Prime Minister Kevin Rudd, announced Australia’s intention of introducing plain

packaging legislation for tobacco products. The Australian government began consultations

with stakeholders in late 2010, as Philip Morris began to re-structure its companies. Although

changes in government leadership occurred in the years that followed, there was no evidence

that the Australian government had changed its intention to introduce plain packaging laws.113

On the basis of these facts, the Tribunal commented that the introduction of plain packaging

laws was:

[f]oreseeable well before the Claimant’s decision to restructure was taken (let alone

implemented). On 29 April 2010, Australia’s Prime Minister Kevin Rudd and Health Minister

Roxon unequivocally announced the Government’s intention to introduce Plain Packaging

Measures.... Accordingly, from that date, there was at least a reasonable prospect that

legislation equivalent to the Plain Packaging Measures would eventually be enacted and a

dispute would arise.114

111 PMA v Australia (Permanent Court of Arbitration, No 2012–12, 17 December 2015) 98–113. 112 Ibid 185 [585]. 113 Ibid 184 [586]. 114 Ibid 184 [586].



On the basis of these facts, the Tribunal held that Australia’s adoption of plain packaging laws

for tobacco products was foreseeable to PM Asia at the time they re-structured.115 However, if

the re-structuring were justified on other grounds, then it would be less likely to be considered

an abuse of process, as the re-structuring would not be solely for the benefit of triggering an

ISDS clause.116 In other words, a re-structuring will not be considered an abuse of process if it

can be justified separately from the possibility of being eligible for ISDS.

PM Asia justified their re-structuring on the grounds that it was ‘part of a broader, group-wide

process’, and submitted internal memoranda as evidence that the re-structuring of PM Australia

was part of its re-structuring initiatives.117 Specifically, PM Asia claimed the re-structure was

to centralise ownership to reduce costs and to minimise tax liabilities.118 The Australian

government cast doubt on the veracity of these internal communications. It reported that any

tax advantage would be negligible, and emphasised that one of the memoranda questions the

commercial advantage that could be gained by re-structuring the Asian affiliates.119

Ultimately, the Tribunal found that PM Asia was unable to establish sufficient business reasons

for re-structuring, and thus ‘the main and determinative, if not sole, reason for restructuring

was the intention to bring a claim under the Treaty’.120 Therefore, the Tribunal was satisfied

that the arbitration constituted an abuse of process, as PM Asia re-structured when it was

reasonably foreseeable that the dispute would arise, and the re-structuring was for the main,

perhaps only, purpose of gaining the rights offered under the Hong Kong–Australia BIT.

Some interpreted the outcome of the case as evidence that ISDS tribunals do not allow abuses

of process by investors, and that the impact of ISDS provisions on the introduction of public

health measures have been over-exaggerated by opponents.121 Others were more cautiously

positive about the Tribunal’s decision, and spoke of the potential for future actions against

NCD prevention measures under ISDS mechanisms.122 As Voon and Mitchell observed:

‘Australia’s win on jurisdiction offered a political boost to countries implementing or

considering standardized tobacco packaging, but the circumstances of Philip Morris’

investment in Australia may not be mirrored elsewhere.’123 In other words, the case will make

it more politically viable for other states to introduce similarly stringent public health measures,

because it reduces the potential for ‘regulatory chill’ induced by the perceived threat of a

measure being subject to ISDS. But this win for NCD prevention should be tempered because

tribunals do not need to follow previous decisions, and facts differ between cases. Thus, a

completely different decision could be reached in another case concerning the same or other

risk commodities and similar regulatory measures.

115 Ibid 185 [588]. 116 Ibid 176 [570]. 117 Ibid 177 [572]. 118 Ibid 179 [573], [574]. 119 Ibid 177–8 [573]. 120 Ibid 184 [584]. 121 Tomas Fitzgerald, ‘Australia’s Plain Packaging Win Over Philip Morris Should Take the Heat off ISDS’, The

Conversation, 18 December 2015 <http://theconversation.com/australias-plain-packaging-win-over-philip-

morris-should-take-the-heat-off-isds-52541>. 122 See eg, Peter Whish-Wilson, ‘Plain Packaging Victory is Outstanding for Public Health but ISDS Still Hangs

Like a Damocles Sword Over Australian Democracy’ (Press Release, 18 December 2015) <http://peter-whish-

wilson.greensmps.org.au/content/media-releases/plain-packaging-victory-outstanding-public-health-isds-still-

hangs-damocles-s>. 123 Tania Voon and Andrew Mitchell, ‘Philip Morris vs Tobacco Control: Two Wins for Public Health and

Uncertainty Remains’ (Columbia FDI Perspectives No 182, Columbia Center on Sustainable Investment, 12

September 2016) <http://ccsi.columbia.edu/files/2013/10/No-182-Voon-and-Mitchell-FINAL.pdf>.




For countries wishing to introduce other measures to reduce NCD risk behaviours, this decision

shows the importance of pre-empting treaty-shopping by making public announcements earlier

rather than later about their intentions to introduce a particular measure to reduce NCDs.

Further, it shows that governments must either be in a position to act, consistent with their

announcements, or at least should internally emphasise the importance of staying consistent

with their announced intention. Otherwise, it will be difficult to prove that a corporate re-

structuring occurred at a time when a dispute was reasonably foreseeable.

Companies producing unhealthy food or alcohol will be able to re-structure to take advantage

of a treaty’s protection if they can justify the re-structuring on grounds other than that it allowed

them to bring a dispute under a specific BIT. Given that food, alcohol and tobacco industries

adopt similar strategies to avoid the introduction of NCD prevention and control measures,124

it seems likely that they would be better prepared to justify a re-structure following the outcome

in this case. For instance, foreign investors will be more aware of the need to create valid

internal communication evidence to support its justifications for re-structuring. Provided they

reflect on the Tribunal’s decision in this case, those industries that produce risk commodities

will be in a better position to refute abuse of process or rights claims.

From the perspective of preventing NCDs, it would have been beneficial if the Tribunal in this

case found that re-structuring to take advantage of a treaty’s protections would be an abuse of

process regardless of whether it was only one of the reasons for re-structuring. Currently

though, corporate actors are in a position where they can re-structure to challenge NCD

prevention measures, which may increase the potential for ISDS to have a regulatory chilling

effect on measures to reduce NCD risk factors. Indeed, it may limit moves towards more

stringent NCD prevention measures based on a rights-based approach. Nevertheless, tribunals

do not follow precedent, and so any decision seeking to limit or prevent the ability of

corporations to treaty-shop could only be persuasive (in non-legal terms) on another tribunal.

IV PHILIP MORRIS V URUGUAY

A Challenges to Uruguay’s Plain Packaging Laws

Since 1968, Uruguay has increasingly adopted measures to reduce tobacco use in order to

prevent NCDs.125 In 2009, Uruguay introduced three new measures that became the subject of

the dispute with Philip Morris. The first measure required that graphic health warnings cover

80 per cent of packages.126 The second identified the especially graphic images that would be

used as health warnings.127 The third prohibited the use of logos, colours or other such markers

that would imply the tobacco product was somehow safer than or otherwise different from

another.128 The latter restriction effectively required a single presentation per brand family, as

124 See eg, Rob Moodie et al, ‘Profits and Pandemics: Prevention of Harmful Effects of Tobacco, Alcohol, and

Ultra-processed Food and Drink Industries’ (2013) 381 The Lancet 670. 125 Presidential Decree 287/009. 126 Ministry of Health of Uruguay, Ordinance No 466 (issued 1 September 2008, entered into force 28 February

2010). 127 Ministry of Health of Uruguay, Ordinance No 514 (issued on 18 August 2008, entered into force 14 February

2010). 128 Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S A (Switzerland) and Abal Hermanos S A

(Uruguay) v Oriental Republic of Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016)

(‘Philip Morris v Uruguay’); Ministry of Public Health Decree No. 287/009 on Health Warnings (2009); Minister



opposed to multiple variations of a brand. These measures, along with others such as

restrictions on places where smoking is permitted, led to significant and unprecedented

decreases in tobacco use in Uruguay.129

Similar to Australia, these standardised packaging laws represent a ‘nudging’ to tobacco, as

the measures have altered and restricted how brands and packaging influence consumer choice,

but they do not remove the risk commodity from sale.130 Arguably, Uruguay’s more restrictive

approach to tobacco marketing is also more aligned with human rights law; but, as discussed,

a rights-based approach employs a more holistic understanding of health, so no one measure

will ensure that a country is meeting its human rights obligations to protect against third party

interferences with health and to pro-actively facilitate health.

Using the ISDS provisions under a BIT between Switzerland and Uruguay,131 the Swiss

subsidiary of the US-based Philip Morris, and other connected firms, sought either the

withdrawal of the laws or damages of at least US$22.2 million with compound interest, as well

as the fees and expenses incurred as a result of the arbitration. Among other breaches, the basis

for their claim was that the packaging laws breached the company’s right to fair and equitable

treatment,132 and Uruguay’s obligation to refrain from acts of expropriation unless for public

purposes and with compensation.133 This case followed two domestic court cases brought by

Philip Morris against Uruguay in the Supreme Court of Justice of Uruguay and the Tribunal de

lo Contencioso Administrativo.

B Expropriation of Trade Marks

Whether trade marks and the goodwill that attaches to them are investments under the relevant

BIT was undisputed in this case. The BIT had defined investments broadly to include ‘every

kind of assets’ including tangible and intangible, and expressly ‘rights in the field of intellectual

property’.134 States considering NCD prevention measures that may affect IP rights should,

therefore, be carefully considering the definition of ‘investment’ when negotiating a BIT

including whether IP rights for particular products or purposes can be removed from the

definition of investment.

Philip Morris argued that Uruguay’s standardised packaging laws had expropriated their trade

marks for each brand variant contrary to article 5(1) of the BIT.135 To support this claim, Philip

Morris argued that Uruguay’s tobacco control measures resulted in a considerable loss of sales

combined with the loss of value of the company’s trade marks.136 In response, Uruguay argued

that trade mark law does not recognise a right to use the trade mark in commerce and that the

economic impact of its plain packaging measures was not substantial enough to be considered

an expropriation.137

of Health of Uruguay, Ministerial Ordinance No 514 (2008). 129 Winston Abascal et al, ‘Tobacco Control Campaign in Uruguay: A Population-based Trend Analysis’ (2012)

380 The Lancet 1575. 130 Note though, under the introduced laws, one brand could generally not have multiple variations. In other words,

the same product could not be branded in different ways to attract different consumers. 131 Switzerland-Uruguay BIT, signed 7 October 1998 (entered into force 22 April 1991). 132 Ibid art 3. 133 Ibid art 5. 134 Ibid art 1(2)(d). 135 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 53 [193]–[195]. 136 Ibid 49 [184]. 137 Ibid 45 [168].




The majority first considered whether the trade mark conferred a positive right to use, or only

a negative right to protect against use by another. In answering this question, the majority

concluded that the legal title to the trade marks had not been affected by Uruguay’s tobacco

control measures as a different proprietary relationship exists between a trade mark holder and

third parties from that between a trade mark holder and the state who issued the trade mark. In

support of this finding, the majority observed: ‘Nothing in any of the legal sources cited by the

Claimants supports the conclusion that a trade mark amounts to an absolute, inalienable right

to use that is somehow protected or guaranteed against any regulation that might limit or restrict

its use’.138 In a similar vein, the majority noted the unreasonable outcomes that would occur if

registering a trade mark guaranteed the holder the right to sell the trade-marked product. In this

way, intellectual property is more subject to the power of the state than physical property. Here,

the majority drew out broader lessons for consumption-control policies by stating:

Particularly in an industry like tobacco, but also more generally, there must be a reasonable

expectation of regulation such that no absolute right to use the trade marks can exist. Otherwise

‘the mere fact of registering a trade mark would guarantee the sale of any trade-marked

product, without regard to other considerations’. If a food additive is, subsequent to the grant

of a trade mark, shown to cause cancer, it must be possible for the government to legislate so

as to prevent or control its sale notwithstanding the trade mark.139

This is an important finding for measures to reduce alcohol or unhealthy food consumption that

alter how the products are presented to the consumers, which tend to be more aligned with

nudging and rights-based approaches to influencing the risk behaviours for NCDs. It suggests

that tribunals will be less likely to require compensation for an investor where a trade mark is

altered for a public health purpose.

When considering whether an expropriation had occurred, the majority considered the entirety

of the business in Uruguay on the grounds that the standardised packaging laws impacted upon

the business activities as a whole. Nonetheless, the majority held that the effects of the

standardised packaging laws were far from being the equivalent to an expropriation, as the laws

had not completely or even substantially deprived Philip Morris of the value of its investment.

In fact, Philip Morris admitted that its Uruguay branch ‘had grown more profitable since 2011’

but added that it ‘would have been even more profitable’ if Uruguay had not adopted the

consumption-control measures.140 The majority concluded:

[i]n respect of a claim based on indirect expropriation, as long as sufficient value remains after

the Challenged Measures are implemented, there is no expropriation. As confirmed by

investment treaty decisions, a partial loss of the profits that the investment would have yielded

absent the measure does not confer an expropriatory character on the measure.141

This enforces a high standard for establishing indirect expropriation, which is consistent with

previous arbitral decisions.142 A mere loss of profits in an investment will not equal indirect

expropriation. Additionally, that the profits may have increased but for the measures being

introduced was not given weight by the majority in this case. Such a finding also suggests that

138 Ibid 75 [268]. 139 Ibid 75 [269]. 140 Ibid 80 [284]. 141 Ibid 81 [286]. 142 See eg, Marvin Roy Feldman Karpa v United Mexican States (Award) (ICSID Arbitral tribunal, Case No

ARB(AF)/99/1, 16 December 2002); Pope & Talbot Inc v The Government of Canada (Decision and Order by

the Arbitral Tribunal) (UNCITRAL, 11 March 2002).



similar measures brought in for food or alcohol will be difficult to challenge unless the profits

the investment would yield are substantially decreased. Thus, measures to reduce the risk

factors for NCDs would have to result in the investor no longer having sufficient value in their

investment after the measures are enforced. This allows for some lee-way in implementing

consumption-control measures. At the same time, measures that ban a particular product, which

may be aligned with a rights-based approach to regulating risk commodities, are likely to lead

to a substantial decrease in the value of an investment and could be subject to indirect

expropriation challenges.

B Defence Against Expropriation Claims: Police Powers Doctrine

Uruguay submitted in response to Philip Morris’s claims that it could adopt measures to protect

public health on the basis of the police powers doctrine, and more broadly, state sovereignty.143

The police powers doctrine is a general and potentially customary international law principle

that is closely connected, conceptually and practically, to state sovereignty.144 Essentially, the

police powers doctrine recognises that states have, on the basis of their sovereignty, an inherent

legal power to regulate even where doing so will interfere with private economic interests.145

Philip Morris viewed the defence as inapplicable because a state’s regulatory power has

limitations imposed by private property and, in their view, the measures were disproportionate

and unreasonable ‘even if enacted in pursuit of public health’.146 It seems then that Philip

Morris views libertarian approaches to public health as reasonable and proportionate, but

measures which tend to be more consistent with a libertarian-paternalist approach are

unreasonable. Certainty, this position is consistent with their commercial interests.

Uruguay argued that the doctrine was implied by the BIT. Specifically, article 2(1) of the BIT

acknowledges that a host state can refuse an investment ‘for reasons of public security and

order, public health or morality’. Article 5(1), the expropriation clause, contains the commonly

used restrictions on expropriation, which is that it must be ‘for the public benefit, as established

by law, on a non-discriminatory basis, and under due process of law...’.147

The Arbitral Tribunal in Tecmed v Mexico first acknowledged that the police powers

doctrine,148 and subsequent cases have further developed a test to determine whether the

doctrine is applicable. For instance, in LG&E Energy Corp v Argentine Republic the test was

described as follows:

It can generally be said that the State has the right to adopt measures having a social or general

welfare purpose. In such a case, the measure must be accepted without any imposition of

liability, except in cases where the State’s action is obviously disproportionate to the need

being addressed.149

143 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 48 [181]. 144 See eg, Walter Wheeler Cook, ‘What Is the Police Power?’ (1907) 7 Columbia Law Review 322. 145 For a useful overview of police power doctrine in international investment law, see Ben Mostafa, ‘The Sole

Effects Doctrine, Police Powers and Indirect Expropriation under International Law’ (2008) 15 Australian

International Law Journal 267, 272–8. 146 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 53 [198]. 147 Switzerland–Uruguay BIT, signed 07 October 1998 (entered into force 22 April 1991). 148 Técnicas Medioambientales Tecmed S A v United Mexican States (ICSID Case No. ARB(AF)/00/2, 29 May

2003) 45–6 [119]. 149 LG&E Energy Corporation, LG&E Capital Corporation, and LG&E International, Inc v Argentine Republic

(ICSID Case No. ARB/02/1, 3 October 2006) 59 [195].




Further detail has been provided in Methanex v United States, where the Tribunal explained

the doctrine as follows:

[a]s a matter of general international law, a non-discriminatory regulation for a public purpose,

which is enacted in accordance with due process and, which affects, inter alios, a foreign

investor or investment is not deemed expropriatory and compensable…150

These considerations were applied in Philip Morris v Uruguay. The majority agreed with

Uruguay that the police powers doctrine was implied by the BIT.151 The important aspect of

this finding is the basis on which this implication was established. Article 31(3)(c) of the

Vienna Convention requires that a treaty provision be interpreted pursuant to the rules of

international law applicable between the parties including customary international law.152 From

this provision, the majority found that the expropriation clause in the BIT must be interpreted

pursuant to the police powers doctrine, as it is a relevant rule of (customary) law that applies

between the parties. Accordingly, Uruguay had not expropriated Philip Morris’s property

because not only did the laws not impact upon the value of the investment, but also the laws

were a ‘valid exercise by Uruguay of its police powers for the protection of public health’.153

This finding, which is consistent the decision in Saluka v Czech Republic,154 adds support to

the view that the police powers doctrine can apply to indirect expropriation claims even where

a BIT provision does not expressly refer to the doctrine.

The majority’s acceptance of the police powers doctrine holds lessons for implementing other

measures to reduce the risk factors for NCDs. In particular, states should consider mentioning

the police powers doctrine expressly when negotiating the expropriation clause in an

investment treaty, and civil society could advocate for such an approach. This would reduce

the persuasiveness of arguments that a state cannot avoid liability under an expropriation clause

by invoking the police powers doctrine under customary international law. A more politically

palatable option may simply be to ensure that the investment treaty refers to the sovereignty of

the contracting parties and their ability to regulate in the public interest.

To reduce the risk behaviours for NCDs, states need to be able to take measures that influence

consumers’ environments, and which address the underlying determinants of such risk

behaviours. The protection offered by the police powers doctrine to states’ regulatory space is,

therefore, important. Moreover, the on-going development of the police powers doctrine as a

defence in expropriation cases is a significant advance for international investment law, which

has largely focused on the rights and interests of investors. The majority’s decision in this case

reflects a concerted attempt to elevate the importance of states exercising regulatory powers

for public health purposes, even though the BIT focuses on investor rights. On the basis of the

majority’s findings, future tribunals could imply the police powers doctrine using article

31(3)(c) of the Vienna Convention in order to protect the exercise of state powers legitimately

for the benefit of public health.

150 Methanex v United States (Final Award) (North American Free Trade Agreement Chapter 11, Part IV, 3 August

2005) 4 [7]. 151 Switzerland–Uruguay BIT, art 5(1). 152 Vienna Convention on the Law of Treaties, opened for signature 23 May 1969, 1155 UNTS 331 (entered into

force 27 January 1980). 153 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 88 [307]. 154 Saluka Investments BV (The Netherlands) v The Czech Republic (Partial Award) (UNCITRAL, 2006) 53–4

[263]–[264].



C Fair and Equitable Treatment

Philip Morris argued that the plain packaging laws were unfair and inequitable. Their grounds

for this argument were twofold: firstly, that the plain-packaging requirements were arbitrary as

they were adopted without scientific evidence, and secondly the requirements did not

adequately serve a public purpose. Secondly, Philip Morris claimed that the plain packaging

laws undermined the company’s legitimate expectations to use and enjoy its investments

including its brand assets. Finally, Philip Morris submitted that the plain packaging laws

destroyed ‘the legal stability that Uruguay pledged in the BIT’.155 Uruguay contradicted these

arguments on the basis that the laws were adopted in good faith, in a non-discriminatory manner

and were logically connected with Uruguay’s public health objectives. In siding with Uruguay,

the majority did not consider the laws to be arbitrary because there was nothing in their

implementation that indicated ‘a willful disregard of due process’ and the plain packaging laws

were adequately connected with the objective of protecting public health.156 In reaching this

decision, the Tribunal consulted a number of sources.

Firstly, the Tribunal accepted written submissions filed by the Pan American Health

Organization and the WHO, which supported the importance of tobacco control measures and

the international empirical evidence illustrating that particular consumers were misled by

different brands of cigarettes into thinking that one cigarette was safer than another.157

Accordingly, the submissions effectively supported Uruguay’s claims regarding the legitimacy

of the laws for public health purposes. Notably, the Tribunal rejected the Inter-American

Association of Intellectual Property’s request to file a written submission due to the ‘close

relationship’ between Philip Morris and the association, including the participation of lawyers

for Philip Morris on the association’s management board and thematic committees.158 The

approach of the Tribunal in this case illustrates a willingness to allow independent non-parties

to participate in complex, investment disputes relating to public health, and reveals the

important contributions such bodies can make, particularly where the host state is less

technically capable. Arguably, the inclusion of such briefs can help improve the legitimacy of

a particular decision by an arbitral body by increasing non-party participation.

Secondly, the majority’s decision shows how public health objectives can profoundly inform

the interpretation of an investment treaty including whether a state interference was fair and

equitable. Due to the evidence regarding tobacco and NCDs, the Tribunal did not consider it

relevant to debate whether a measure was reasonable, and considered it sufficient that the plain

packaging laws were ‘an attempt to address a real public health concern’.159 To a certain extent,

this finding may allay concerns from some commentators that ‘the investor-friendly structure

of investor–state dispute mechanisms can facilitate attacks on the presumption that public

health regulation is necessarily for a public purpose’.160

Finally, the Tribunal noted that Uruguay’s plain packaging laws were in accordance with the

FCTC, that Uruguay was an active participant in the implementation of the FCTC, and that this

155 Ibid 88 [309] 156 Ibid 112 [390]. 157 Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S A (Switzerland) and Abal Hermanos S A

(Uruguay) v Oriental Republic of Uruguay (Procedural Order No 3) (ICSID Case No ARB/10/7, 17 February

2015); Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S A (Switzerland) and Abal Hermanos S A

(Uruguay) v Oriental Republic of Uruguay (Procedural Order No 4) (ICSID Case No ARB/10/7, 24 March 2015). 158 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 10 [55]. 159 Ibid 119 [409]. 160 Samrat Ganguly, ‘The Investor–State Dispute Mechanism (ISDM) and a Sovereign’s Power to Protect Public

Health’ (1999) 38 Columbia Journal of Transnational Law 113, 162.




treaty was evidence-based, so measures consistent with FCTC provisions could also be

considered evidence-based.161 Consequently, the Tribunal did not consider it necessary for

Uruguay to perform additional studies on plain packaging or to present further evidence to

support its measures in order for the laws to be considered fair and equitable.

Those countries that are highly engaged at an international level in the sharing of knowledge

and cooperation around measures to reduce the consumption of risk commodities may,

therefore, be in a better position to implement control measures regardless of whether they have

the resources to undertake the necessary scientific research. This decision illustrates the

persuasiveness of a treaty based on scientific evidence, regarding control measures that reduce

the consumption of particular risk behaviours. If Uruguay had not been a member of the FCTC,

or had not been FCTC-compliant with its plain packaging laws, the link may not have been

established between the plain packaging laws and the public health purpose. This would

perhaps have led to the laws being considered as arbitrary and a breach of the fair and equitable

guarantee. Given that unhealthy foods and alcohol do not have similar treaties regarding control

measures, the arguments put forward by Philip Morris may be far more persuasive in cases

concerning consumption-control measures for other products.

In relation to Philip Morris’s legitimate expectations and the stability of Uruguay’s laws, the

Tribunal noted that specific undertakings by host states to investors form legitimate

expectations, but a company cannot have a legitimate expectation that legislative schemes

applying across a jurisdiction will remain unchanged.162 Additionally, the Tribunal did not

consider that Uruguay’s legal system had been made unstable or substantially modified as a

result of the introduction of plain packaging laws. Notably, the Tribunal stated:

Manufacturers and distributors of harmful products such as cigarettes can have no expectation

that new and more onerous regulations will not be imposed, and certainly no commitments of

any kind were given by Uruguay to the Claimants or (as far as the record shows) to anyone

else.163

This is a positive statement from the perspective of regulating risk commodities to prevent

NCDs. Products such as alcohol and highly processed and unhealthy food products are also

considered harmful by WHO and other credible bodies on the basis of scientific evidence.

Arguably then, investors cannot have a legitimate expectation that regulations in relation to

these products will not become more onerous over time. This finding is consistent with the

trends in consumption-control measures outlined above in Part II A Approaches to Regulatory

Strategies. In particular, it allows for a libertarian-paternalist approach to consumption-control

measures. Whether it allows for interventions as potentially onerous as a rights-based approach

to NCD prevention is debatable.

D Denial of Justice

Philip Morris claimed another breach of the fair and equitable treatment obligation based on

the argument that they were denied justice. Their argument was that the two cases it brought

domestically against the measures within Uruguay reached contradictory interpretations of the

same statutory provision but both decisions still overturned the laws. The cases were brought

161 Philip Morris v Uruguay (Award) (ICSID Arbitral Tribunal, Case No ARB/10/7, 8 July 2016) 113 [393]. 162 Ibid 124 [426]. 163 Ibid 125 [429].



to the Supreme Court of Justice of Uruguay and the Tribunal de lo Contencioso Administrativo,

which are largely equal under Uruguay’s constitutional system. It is unusual that one court’s

decision does not override another where there is contradictory reasoning.

The parties and the majority accepted that a denial of justice is found ‘[i]f and when the

judiciary breached the standard by fundamentally unfair proceedings and outrageously wrong

final and binding decisions’.164 The majority’s decision, therefore, maintains this high standard

for a denial of justice, which addresses concerns that the ISDS will significantly curb sovereign

powers to the disadvantage of public interests and goals. In line with this, the majority noted

that ISDS tribunals ‘should not act as courts of appeal to find a denial of justice, still less as

bodies charged with improving the judicial architecture of the state’.165 Ultimately, the majority

was not convinced that there had been an outrageously wrong decision or fundamentally unfair

proceedings, as Philip Morris were able to present their case in court, to judicial authorities

acting within their jurisdiction, and received a properly reasoned decision.166 This decision

reflects a careful consideration of the role of ISDS and the variations between legal systems.

E Concurring and Dissenting Opinion

Arbitrator Gary Born, who was appointed by Philip Morris, dissented from the majority in two

ways. Firstly, he considered the single presentation requirements did not accord with fair and

equitable treatment.167 He emphasised that the FCTC contains a comprehensive range of

detailed regulatory measures that should be adopted by signatories, but the FCTC does not

oblige states or even recommend that states adopt laws that remove brand variants.168 Because

international evidence was not considered as sufficient by Born, he focused on Uruguay’s

domestic evidence and process for implementing the laws. Born commented ‘the requirement

was formulated, drafted and approved in the space of a few days’.169 Born considered it

arbitrary and disproportionate to remove brand variant trade marks because a blanket single

presentation requirement is not proportionate to protecting consumers from being misled into

thinking some variants of tobacco products were healthier than others. This is a compelling

point, as surely other measures could have been used to prevent consumers from being misled.

Thus, Born stated: ‘[n]otwithstanding the deference that is due sovereign regulatory measures

and judgments, I am convinced that the requirement does not bear a rational relationship to its

stated legislative objective, yet disproportionately injures important investor rights’. Born’s

judgement shows that states should ensure their objectives for a particular measure expressly

include protecting public health, or otherwise draw a link between the measure and achieving

public health objectives. Merely implying such a purpose will be less convincing for some

arbitrators.

Secondly, Born considered that Philip Morris was denied access to justice, and therefore

Uruguay had breached its obligation to provide fair and equitable treatment. Born commented

that the two court decisions were ‘rendered in closely-related proceedings, involving the same

parties and interpreted the same provision of Uruguayan law to mean diametrically opposed

164 Ibid 143 [498]. 165 Ibid 151 [528]. 166 Ibid 151 [527]. 167 Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S A (Switzerland) and Abal Hermanos S A

(Uruguay) v Oriental Republic of Uruguay (Concurring and Dissenting Opinion) (ICSID Arbitral Tribunal, Case

No ARB/10/7, 8 July 2016). 168 Ibid 24 [99]. 169 Ibid 29 [116].




and contradictory things’.170 This finding leaves consumption-control measures vulnerable to

ISDS challenges where the host state’s court system does not have a mechanism for the

claimant to resolve conflicts between equal courts with finality. Thus, Born applied a lower

standard than the majority in relation to denial of justice. In contrast, and as discussed, the

majority did not find the decisions were at a level serious enough to constitute a denial of

justice. An especially weighty factor in this regard was that both courts’ decisions were

constitutional.

V CONCLUSION

International investment law was designed to protect foreign investors from unfair

interferences by host states. It remains an area of law focused on protecting the rights of foreign

investors in order to promote economic growth. Due to this focus, as well as the deficiencies

in ISDS processes, including a lack of transparency, there is a risk that an arbitral tribunal will

award compensation to an investor, or require the state to overturn the challenged measure, in

cases where a legitimate measure was adopted to reduce the consumption of risk commodities.

This risk has heightened in recent decades as consumption-control measures have become more

onerous in line with a more libertarian-paternalist approach.

Fortunately, the Philip Morris v Uruguay case indicates a willingness by international

investment tribunals to prioritise a state’s power to enact legitimate public health protections,

over investors’ interests. The decision further reflects how states may be able to use

international evidence and the support of independent, international bodies to establish the

proportionality and purpose of a particular measure to reduce alcohol or unhealthy food

consumption. This is especially important for low income countries that lack the capacity to

develop such evidence. Meanwhile, the Philip Morris v Australia case indicates how countries

can try to prevent treaty-shopping, and, one hopes, provides an influential case for other

tribunals when dealing with similar instances.

The outcomes of the ISDS cases concerning tobacco products should be understood as a

positive development for other consumption-control measures, but it is a limited one. As the

facts and provisions of each case differ, the risk of regulatory chill remains, as states can still

be subject to ISDS for measures relating to tobacco products, and no case concerning other

consumption-control measures need consider the Philip Morris cases. In addition, the risk of

ISDS challenges to regulatory measures for reducing alcohol or unhealthy food consumption

is arguably far greater than tobacco, due to the broader range of private actors and potentially

relevant BITs involved. Likewise, the situation is likely to differ greatly where a case concerns

alcohol products or unhealthy food products, which lack the support of an international treaty

as a basis for consumption-control measures. There is also a far broader range of alcohol and

food products with differing compositions, and low consumption of these products does not

necessarily have harmful health impacts. For these reasons, it will generally be more difficult

for host states to prove that regulatory measures to reduce alcohol abuse or unhealthy diets are

proportionate and for legitimate public health purposes.

In the case of food, a state may be more likely to avoid liability under ISDS if it introduces

consumption-control measures for particular substances with well-established negative health

impacts (eg trans fats) and specific products (eg sugar-sweetened beverages), rather than

applying control measures like restriction on marketing across a range of products, such as

170 Ibid 2 [9].



unhealthy food. In relation to alcohol, the strategy may be somewhat different because, if some

alcohol products are restricted and others are not, this may suggest the consumption-control

measure is discriminatory and not for legitimate public health purposes. However, a rights-

based approach to NCD prevention would arguably support more drastic regulatory

interventions that would perhaps not meet the proportionality considerations that tribunals

undertake when considering whether an expropriation was in the public interest or whether an

investor was treated fairly and equitably. To support consumption-control measures, states

should ensure they are consistent with WHO guidelines, and they may bolster claims that a

measure is proportionate and legitimate by demonstrating a history of being pro-active in

relation to reducing alcohol and unhealthy food consumption. The potential for ISDS to

weaken, delay or prevent consumption-control measures should remain a key concern of public

health advocates, and states should be considering ways of protecting their regulatory space to

adopt consumption-control measures when negotiating investment treaties.





THE GLOBAL TOBACCO EPIDEMIC, THE

PLAIN PACKAGING OF TOBACCO PRODUCTS,

AND THE WORLD TRADE ORGANIZATION

MATTHEW RIMMER*

In response to complaints by Ukraine, Honduras, the Dominican Republic, Cuba, and

Indonesia, the government of Australia has defended the introduction of plain packaging of

tobacco products in the World Trade Organization. This article focuses upon the legal defence

of Australia before the WTO Panel. A key part of its defence has been the strong empirical

evidence for the efficacy of plain packaging of tobacco products as a legitimate health measure

designed to combat the global tobacco epidemic. Australia has provided a convincing case that

plain packaging of tobacco products is compatible with the TRIPS Agreement 1994,

particularly the clauses relating to the aims and objectives of the agreement; the requirements

in respect of trade mark law; and the parallel measures in relation to access to essential

medicines. Australia has also defended the consistency of plain packaging of tobacco products

with the TBT Agreement 1994. Moreover, Australia has provided clear reasons for why the

plain packaging of tobacco products is compatible with GATT. The position of Australia has

been reinforced by a number of third parties — such as New Zealand, the United Kingdom,

Ireland, Norway, Canada, and others — which have also been pioneers in tobacco control and

public health. Australia’s leadership in respect of tobacco control and plain packaging of

tobacco products is further supported by larger considerations in respect of international

public health law, human rights, and sustainable development.

I INTRODUCTION

The World Health Organization (‘WHO’) has highlighted the serious, devastating impact of

the global tobacco epidemic in a series of reports.1 The agency has stressed that tobacco is a

leading cause of death, illness and impoverishment: ‘The tobacco epidemic is one of the biggest

public health threats the world has ever faced, killing around 6 million people a year’.2

Moreover, the WHO observes that ‘children from poor households are frequently employed in

* Dr Matthew Rimmer, BA/LLB (ANU), PhD (UNSW), is a Professor in Intellectual Property and Innovation Law

at the Faculty of Law in the Queensland University of Technology (QUT). He is a leader of the QUT Intellectual

Property and Innovation Law research program, and a member of the QUT Digital Media Research Centre, the

QUT Australian Centre for Health Law Research, and the QUT International Law and Global Governance

Research Program. 1 World Health Organization, WHO Report on the Global Tobacco Epidemic, 2008: The MPOWER Package

(WHO, 2008) http://www.who.int/tobacco/mpower/2008/en/>; World Health Organization, WHO Report on the

Global Tobacco Epidemic, 2009: Implementing Smoke-free Environments (WHO, 2009)

<http://www.who.int/tobacco/mpower/2009/en/>; World Health Organization, WHO Report on the Global

Tobacco Epidemic, 2011: Warning about the Dangers of Tobacco (WHO, 2011)

<http://www.who.int/entity/tobacco/global_report/2011/en/index.html>; World Health Organization, WHO

Report on the Global Tobacco Epidemic, 2013: Enforcing Bans on Tobacco Advertising, Promotion and

Sponsorship (WHO, 2013) < http://www.who.int/tobacco/global_report/2013/en/>; World Health Organization,

WHO Report on the Global Tobacco Epidemic, 2015: Raising Taxes on Tobacco (WHO, 2015)

<http://www.who.int/entity/tobacco/global_report/2015/report/en/index.html>. 2 World Health Organization, ‘Tobacco’ (Fact Sheet, June 2016)

<http://www.who.int/mediacentre/factsheets/fs339/en/>.




tobacco farming to provide family income’.3 The agency stresses that there is an important

children’s rights dimension to the issue: ‘These children are especially vulnerable to “green

tobacco sickness”, which is caused by the nicotine that is absorbed through the skin from the

handling of wet tobacco leaves’.4

In the face of the threat of the global tobacco epidemic, the WHO has established the WHO

Framework Convention on Tobacco Control (‘FCTC’).5 Article 3 of the Convention highlights

the collective goal ‘to protect present and future generations from the devastating health, social,

environmental and economic consequences of tobacco consumption and exposure to tobacco

smoke’. Dr Margaret Chan, former Director-General of the WHO, has highlighted the

important role of the agreement,6 noting that ‘following the adoption of the agreement,

governments around the world have taken decisive steps not only to reduce tobacco use, but

also to stand up to the multinational tobacco companies standing in the way of global

progress’.7 The WHO has been supportive of its members introducing plain packaging of

tobacco products as part of the FCTC. There has been concern, though, at the conference of

parties about the use of trade and investment agreements to challenge public health measures,

such as tobacco control.8

A pioneer in public health, Australia has undertaken an ‘Olive Revolution’ and introduced plain

packaging for tobacco products.9 Melanie Wakefield and colleagues commented upon the

regime established in Australia: ‘From 1 September 2012, all tobacco manufactured for sale in

Australia was required to be contained in plain dark brown packs, with 75% front-of-pack

graphic health warnings and the brand name and variant limited to a standardised font size and

type’.10 After a constitutional challenge by ‘big tobacco’ companies, Australia successfully

defended the plain packaging of tobacco products scheme in the High Court of Australia.11

Furthermore, Australia also defeated an Investor–State Dispute Settlement action by Philip

Morris brought under a Hong Kong–Australia investment agreement.12 Australia’s plain

3 Ibid. 4 Ibid. 5 WHO Framework Convention on Tobacco Control (‘FCTC’), opened for signature 16 June 2003, 2302 UNTS

166 (entered into force 27 February 2005) <http://www.who.int/fctc/en/>. For a history of the agreement, see: Gro

Harlem Brundtland, Madam Prime Minister: A Life in Power and Politics (Farrar, Straus and Giroux, 2002); and

Heather Wipfli, The Global War on Tobacco: Mapping the World’s First Public Health Treaty (John Hopkins

University Press, 2015). 6 Margaret Chan, ‘Every Tobacco Death is an Avoidable Tragedy. The Epidemic Must Stop Here’, The Guardian

(online), 6 November 2016, <https://www.theguardian.com/global-development/2016/nov/06/tobacco-death-

avoidable-tragedy-epidemic-india-conference-margaret-chan-world-health-organisation?CMP=share_btn_tw>. 7 Ibid. 8 The ‘Punta del Este Declaration’ of 2010 reiterates the firm commitment of parties to the FCTC ‘to prioritize

the implementation of health measures designed to control tobacco consumption’ and ‘their concern regarding

actions taken by the tobacco industry that seek to subvert and undermine government policies on tobacco control’:

Conference of the Parties, WHO Framework Convention on Tobacco Control, Punta del Este Declaration, fourth

session of the Conference of the Parties, Held in Punta del Este, Uruguay, 15–20 November 2010. 9 Tobacco Plain Packaging Act 2011 (Cth) and Tobacco Plain Packaging Regulations 2011 (Cth). For a history

of the debate, see Simon Chapman, and Becky Freeman, Removing the Emperor’s Clothes: Australia and Tobacco

Plain Packaging (Sydney University Press, 2014). 10 Melanie Wakefield et al, ‘Introduction Effects of the Australian Plain Packaging Policy on Adult Smokers: A

Cross-sectional Study’ (2013) 3(7) BMJ Open doi:10.1136/bmjopen-2013-003175. 11 JT International SA v Commonwealth of Australia [2012] HCA 43, High Court of Australia; Matthew Rimmer,

‘The High Court of Australia and the Marlboro Man: The Battle Over The Plain Packaging of Tobacco

Products’, in Tania Voon, Andrew Mitchell, and Jonathan Liberman (eds) Regulating Tobacco, Alcohol and

Unhealthy Foods: The Legal Issues (Routledge, 2014) 337; and Catherine Bond, ‘Tobacco Plain Packaging in

Australia: JT International v Commonwealth and Beyond’ (2017) 17 QUT Law Review 1. 12 Philip Morris Asia Ltd v Australia (Award on Jurisdiction and Admissibility) (Permanent Court of Arbitration,




packaging of tobacco products has also been the subject of a challenge in the World Trade

Organization (‘WTO’). That challenge will be the focus of this article.

The topic of intellectual property and public health has also been the subject of much

disputation in international trade law in respect of tobacco control and plain packaging in the

2010s. The tobacco industry has sought to challenge the validity and the legitimacy of the plain

packaging of tobacco products, through political lobbying, public relations campaigns,

litigation, Investor–State Dispute Settlement clauses,13 and trade agreements. The tobacco

industry has also engaged in various tactics to disrupt the impact of plain packaging of tobacco

products.14 In terms of international trade, five countries — Ukraine, Honduras, the Dominican

Republic, Cuba, and Indonesia — have challenged Australia’s regime of plain packaging of

tobacco products in the WTO.15 The five complaints have progressed slowly.16 In May 2014,

WTO Director General Roberto Azevêdo appointed three panellists to examine the dispute

against Australia’s public health measure requiring tobacco products to be sold in plain

packaging in this country.17 The panellists include Alexander Erwin, a former trade minister

from South Africa, François Dessemontet from Switzerland, and Billie Miller, a former

politician from Barbados. In 2015, the WTO Panel heard oral proceedings in the case.18 Four

complainants presented oral argument: Honduras, Indonesia, Cuba and Dominican Republic.

Ukraine withdrew its legal claim in the middle of the dispute.19 There were 36 third parties

participating in the WTO proceeding. 20

PCA Case No 2012-12, 17 December 2015) <http://www.pcacases.com/web/view/5>. 13 For an excellent case note on this dispute, see Jarrod Hepburn and Luke Nottage, ‘Case Note: Philip Morris

Asia v Australia’ (2017) 18 Journal of World Investment and Trade 307. For a discussion of the larger debate over

Investor–State Dispute Settlement, see: Andrew Mitchell, Elizabeth Sheargold and Tania Voon, Regulatory

Autonomy in International Economic Law: The Evolution of Australian Policy on Trade and Investment (Edward

Elgar, 2017); and Jarrod Hepburn, Domestic Law In International Investment Arbitration (Oxford University

Press, 2017). For an analysis of the implications of Investor–State Dispute Settlement for non-communicable

diseases, see Hope Johnson, ‘Investor–State Dispute Settlement and Tobacco Control: Implications for Non-

Communicable Diseases Prevention and Consumption–Control Measures’, (2017) 17 QUT Law Review 102. 14 Michelle Scollo et al, ‘Tobacco Product Developments Coinciding with the Implementation of Plain Packaging

in Australia’ (2014) Tobacco Control doi: 10.1136/tobaccocontrol-2013-051509. 15 WTO Dispute Settlement, Dispute regarding Australia — Certain Measures Concerning Trademarks and Other

Plain Packaging Requirements Applicable to Tobacco Products and Packaging. The complainants are: Ukraine,

Dispute DS434, <http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm>; Honduras, Dispute

DS435 <http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds435_e.htm>; Dominican Republic, Dispute

DS441, <http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds441_e.htm>; Cuba, Dispute DS458,

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds458_e.htm>; and Indonesia, Dispute DS467,

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds467_e.htm>. 16 Catherine Saez and William New, ‘WTO to Consider Five Australian Plain Packaging Disputes Under One

Panel’, Intellectual Property Watch (online), 26 April 2014, <http://www.ip-watch.org/2014/04/26/wto-to-

consider-australia-plain-packaging-disputes-under-one-panel/>. 17 ‘Panel Appointed for WTO Mega-case on Australian Plain Packaging’, Intellectual Property Watch (online), 6

May 2014, <http://www.ip-watch.org/2014/05/06/panel-appointed-for-wto-mega-case-on-australia-tobacco-

packaging/>. 18 Action on Smoking and Health (‘ASH’), ‘World Trade Organization Panel to Hear Oral Arguments on

Australia[n] Tobacco Plain Packaging Case from 28 to 30 October 2015’ (Press Release, 27 October 2015)

<http://ash.org.uk/media-and-news/press-releases-media-and-news/world-trade-organization-panel-to-hear-oral-

arguments-on-australia-tobacco-plain-packaging-case-from-28-to-30-october-2015/>. 19 ‘Ukraine Drops Lawsuit Against Australia Over Plain-Packaging Tobacco Laws, WTO Says’, ABC News

(online), 4 June 2015, <http://www.abc.net.au/news/2015-06-04/plain-packaging-tobacco-ukraine-drops-lawsuit-

against-australia/6520160>. 20 ASH, above n 18.



This article — being written in late 2017, before the decision of the WTO Panel has been

handed down publicly — is an analysis of the arguments in the dispute. In May 2017, there

were reports in the media that Australia has prevailed in the matter.21 In fact, the decision has

been communicated in private to the parties, however, it will not be made public until the

middle of 2018, due to the need for the work to be translated. It is a somewhat unsatisfactory

state of affairs to have a leaked draft outcome, without the accompanying reasoning.

Nonetheless, public health advocates were delighted by the decision. Nicola Roxon observed:

‘I'm absolutely thrilled with the news today because it's a big win for Australia, both for our

previous government [and] also for the current government that continued to fight so hard’.22

No doubt, Australia’s opponents will contemplate a further appeal against the decision. Of

necessity, this article has been written in the interval between the argument of the case and the

publication of the final decision. Given the stage of the proceedings, and that the official WTO

decision and reasons are as yet unavailable, it will consider the broad arguments of the parties

in the dispute, and will not engage in a detailed black letter analysis of the dispute, as that

would be premature (especially given the decision is expected to be lengthy). The focus of the

article is upon the competing arguments of the parties to the dispute, and the third parties.

As such, the piece is written from the perspective of evaluating the arguments of the countries

involved in the trade dispute (which have been supported by the tobacco industry).23 The article

highlights the importance of public health and human rights in the context of international

trade,24 and supports the position of Australia that plain packaging of tobacco products is

defensible under international trade law. Part II considers the relationship between international

trade law, and the FCTC,25 and considers the public health arguments of Australia in respect

of the regime. Part III examines the conflict over the Agreement on Trade-related Intellectual

Property Rights (‘TRIPS’), and the plain packaging of tobacco products.26 Part IV explores the

operation of the Agreement on Technical Barriers to Trade (‘TBT’).27 Part V briefly considers

the arguments about plain packaging of tobacco products, and the General Agreement on

21 Tom Miles and Martinne Geller, ‘Australia Wins Landmark WTO Tobacco Packaging Case — Bloomberg’,

Reuters, 5 May 2017, <https://www.reuters.com/article/us-wto-tobacco-australia/australia-wins-landmark-wto-

tobacco-packaging-case-bloomberg-idUSKBN1801S9>; ‘Australia wins Landmark WTO Tobacco Plain

Packaging Case’, ABC News (online), 5 May 2017, <http://www.abc.net.au/news/2017-05-05/australia-wins-

landmark-wto-tobacco-packaging-case/8498750>; Simon Chapman, ‘World Trade Organization Gives

Australia’s Plain Tobacco Packs The (Draft) Thumbs Up’, The Conversation, 5 May 2017,

<https://theconversation.com/world-trade-organisation-gives-australias-plain-tobacco-packs-the-draft-thumbs-

up-77234>; ‘WTO Ruling Could Light the Way to a Tobacco-free Future’ (QUT News, 5 May 2017)

<https://www.qut.edu.au/news/news?news-id=117336>. 22 Nick Grimm, ‘Cigarette Plain Packaging: Former Health Minister Nicola Roxon Hails Leaked WTO Ruling’,

The World Today, 5 May 2017, <http://www.abc.net.au/news/2017-05-05/nicola-roxon-hails-leaked-wto-plain-

packaging-ruling/8500610>. 23 Christopher Thompson, ‘Big Tobacco Backs Australian Law Opposers’, Financial Times (online), 29 April

2012, <http://www.ft.com/intl/cms/s/0/314c9446-91fb-11e1-867e-00144feab49a.html >.The reporter noted:

‘Philip Morris International and British American Tobacco, the two largest publicly listed tobacco companies by

volume outside China, told the FT they were advising several countries that had complained that Australia’s plain

packaging laws — in which tobacco companies will have to sell their products in identical drab packaging —

violate international trade agreements’. 24 Lawrence Gostin, Global Health Law (Harvard University Press, 2014), 205. 25 WHO FCTC <http://www.who.int/fctc/en/>. 26 Agreement on Trade-related Aspects of Intellectual Property Rights (‘TRIPS Agreement’), adopted 15 April

1994 at Marrakesh, TRT/WTO01/001, entry into force 1 January 1995 (annex 1C of the Marrakesh Agreement

Establishing the World Trade Organization, 1867 UNTS 3). 27 Agreement on Technical Barriers to Trade (‘TBT Agreement’), opened for signature on 15 April 1994, 1868

UNTS 120 (entered into force 1 January 1995) (annex 1A of the Marrakesh Agreement Establishing the World

Trade Organization, 1867 UNTS 3).




Tariffs and Trade (‘GATT’).28 Part VI considers the arguments of third parties to the dispute.

In particular, it highlights the positions of key countries in respect of intellectual property and

public health. The article concludes in Part VII that Australia’s plain packaging of tobacco

products regime is consistent and compatible with international law on trade, and technical

barriers to trade, intellectual property, and public health. Moreover, the parallel field of access

to medicines supports the need for intellectual property flexibilities in respect of public health.

II INTERNATIONAL HEALTH LAW

International public health law provides an important context for Australia’s trade dispute in

respect of the plain packaging of tobacco products. The question of the efficacy of plain

packaging of products is an important consideration in respect of intellectual property,

technical barriers to trade, and other general considerations in respect of trade. The overarching

argument of this article is that international trade law does need to pay due deference to

international public health law, human rights, and sustainable development.

A The World Health Organization

Internationally, the WHO welcomed the landmark ruling of the High Court of Australia, and

called upon the ‘rest of the world to follow Australia’s tough stance on tobacco marketing’.29

The then Director-General of WHO, Dr Margaret Chan, emphasised that the ruling would

encourage other countries to implement tobacco control measures, such as the plain packaging

of tobacco products: ‘With so many countries lined up to ride on Australia’s coat-tails, what

we hope to see is a domino effect for the good of public health’.30 She also stressed that the

Australian experience would be of benefit to other nations:

The evidence on the positive health impact of plain packaging compiled by Australia’s High

Court will benefit other countries in their efforts to develop and implement strong tobacco

control measures to protect the health of their people and to stand resolute against the advances

of the tobacco industry.31

Nicola Roxon — a key figure in the implementation of Australia’s plain packaging regime as

Minister for Health and as Attorney-General — received a special award from the WHO for

‘her unwavering leadership’ in the field of health.32

For World No Tobacco Day in 2012, the WHO disseminated videos, lauding Australia’s regime

for the plain packaging of tobacco products.33 This was followed in 2016 by the World No

28 General Agreement on Tariffs and Trade (‘GATT’), LT/UR/A-1A/1/GATT/2 (signed 30 October 1947) (as

incorporated in annex 1A of Marrakesh Agreement Establishing the World Trade Organization, 1867 UNTS 3). 29 Margaret Chan, ‘WHO Welcomes Landmark Decision from Australia’s High Court on Plain Packaging’,

(Statement by WHO Director-General, 15 August 2012)

<http://www.who.int/mediacentre/news/statements/2012/tobacco_packaging/en/index.html>. 30 Ibid. 31 Ibid. 32 Shin Young-soo, ‘Turn-over of Awards to Honourable Nicola Roxon, Minister for Health and Ageing for the

Australian Government’ (Speech by World Health Organization Regional Director for the Western Pacific to

Parliament of Australia, Canberra, 30 May 2011)

<http://www.wpro.who.int/regional_director/speeches/2011/20110531/en/index.html>. 33 World Health Organization, Countries Stand Shoulder to Shoulder Fighting Big Tobacco (4 June 2012)

YouTube <http://www.youtube.com/watch?feature=player_embedded&v=EAfLvuQvSSc>.



Tobacco Day ‘Get Ready for Plain Packaging’ campaign.34 In 2017, WHO has highlighted how

the tobacco epidemic compromises a number of the global goals of sustainable development.35

At the TRIPS Council, the representatives of the WHO provided vocal support for Australia’s

position. 36 They emphasised ‘that tobacco use was one of the greatest threats to public health

the world had ever faced, and the single most preventable cause of death in the world today’.37

The representatives observed: ‘Globally, tobacco consumption killed nearly six million people

a year through both direct use and the deadly effects of second-hand smoke, more than 70 per

cent of whom reside in low- and middle-income countries’.38 The WHO was worried that ‘as

necessary tobacco control measures continued to be implemented in developed countries, the

tobacco industry, through aggressive marketing and interference practices, had shifted its focus

to new markets in the developing world some time ago’.39 The WHO stressed that ‘it was a

critical moment in the global effort to curb the tobacco epidemic for the introduction of

necessary public health interventions under the WHO Framework Convention on Tobacco

Control’,40 and emphasised that:

Because [non-communicable diseases] would result in long-term macroeconomic impacts on

labour supply, capital accumulation and GDP worldwide, with the consequences most severe

in developing countries, strong public health interventions, like the plain packaging measure,

were relevant in addressing both health and economic concerns.41

The WHO was

of the view that the implementation of plain tobacco product packaging, representing a

legitimate tobacco control measure, would have a substantial impact on tobacco consumption,

was fully in line with the spirit and intent of the outcome of the UN High-Level Meeting, and

was in accordance with international legal obligations under the WHO Framework Convention

on Tobacco Control.42

On 29 October 2014, the Head of the Convention Secretariat made a joint statement with the

WHO at the WTO TRIPS Council Meeting.43 In response to concerns related to plain 34 World Health Organization, World No Tobacco Day 2016: Get Ready for Plain Packaging (2016),

<http://www.who.int/campaigns/no-tobacco-day/2016/en/>. 35 World No Tobacco Day: Tobacco — A Threat to Development (31 May 2017) World Health Organization

<http://www.who.int/campaigns/no-tobacco-day/2017/event/en/>; Margaret Chan, ‘Tobacco is a Deadly Threat

to Global Development’, (WHO Commentary, 30 May 2017)

<http://www.who.int/mediacentre/commentaries/2017/tobacco-threat-development/en/>; United Nations

Development Programme, Integrating the WHO Framework Convention on Tobacco Control into UN and

National Development Planning Instruments (2014)

<http://www.who.int/fctc/publications/Development_Planning_and_Tobacco_Control_20140312.pdf>. 36 World Trade Organization, The Council for TRIPS Meeting of 28–29 February 2012, IP/C/M/69 (minutes

published 15 May 2012)

<https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(+%40Symbol%3d+ip%2fc%2fm%2f*

)&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true#>. 37 Ibid. 38 Ibid. 39 Ibid [219]. 40 Ibid [219]. 41 Ibid [221]. 42 Ibid [223]. 43 World Health Organization, ‘WHO and FCTC Made a Joint Statement on Plain Packaging at WTO Meeting’

(Media Briefing, November 2014); WTO TRIPS Council Meeting, 28–29 October 2014, and WTO TBT

Committee Meeting, 5 November 2014

<http://www.who.int/fctc/mediacentre/news/2014/wtotrade/en/#.VGJxWnhBaV0.twitter>; Statement of the




packaging of tobacco products and their compatibility with the TRIPS Agreement, the WHO

stated that ‘the implementation of standardized tobacco product packaging represents a

legitimate and effective tobacco control measure, and is fully in line with the spirit and intent

of the outcome of the UN High-level Meeting, and is in accordance with international legal

obligations under the WHO FCTC.’44 A similar statement was made to the WTO TBT

Committee Meeting.45 The WHO recommended that Parties should consider adopting plain

packaging in the guidelines for implementation of both Articles 11 and 13.

Dr Margaret Chan observed at the World Conference on Tobacco and Health that there was

strong empirical evidence supporting plain packaging of tobacco products: ‘The evidence base

is strong, empirical, and comes from well-qualified, respected, and credible sources’.46

Jonathan Liberman has emphasised the significance of the FCTC to understanding the conflicts

over the plain packaging of tobacco products, observing that both domestic challenges and

ongoing international challenges to Australia’s legislation will have to consider ‘the

relationship between the FCTC, as both international law and international norm, and trade and

investment obligations’.47 He has suggested:

The accumulation of litigation experience and development of jurisprudence build an

invaluable collective resource of ideas, themes and narratives that can be drawn upon in

different ways in different places to strengthen ongoing efforts to reduce the global burden

caused by tobacco and the tobacco industry.48

For its part, the tobacco industry has sought to undermine the FCTC and the global

dissemination of plain packaging of tobacco products.49

The WTO disputes raise a larger meta-question about the relationship between international

health law and trade law, between the FCTC and trade agreements, such as the TRIPS

Agreement, the TBT Agreement, and GATT.

B Post-implementation Empirical Evidence in Respect of Plain Packaging in Australia

There has been an important debate in the WTO about the empirical evidence for the impact of

plain packaging of tobacco products. The introduction of plain packaging was supported by a

strong body of empirical research,50 as set out by Australia’s National Preventative Health

World Health Organization in Relation to the Issue of Standardized Tobacco Product Packaging to WTO TRIPS

Council Meeting; Geneva 28─29 October 2014; and Statement of the World Health Organization in Relation to

the Issue of Standardized Tobacco Product Packaging to WTO TBT Committee Meeting; Geneva 5 November

2014. 44 Ibid. 45 Ibid. 46 Dr Margaret Chan, Director-General of the World Health Organization, ‘Keynote address’ (delivered at the

World Conference on Tobacco and Health, Abu Dhabi, United Arab Emirates, 18 March 2015)

<http://www.who.int/dg/speeches/2015/trends-tobacco-use/en/>. 47 Jonathan Liberman, ‘Plainly Constitutional: The Upholding of Plain Tobacco Packaging by the High Court of

Australia’ (2013) American Journal of Law and Medicine 361. 48 Ibid. 49 Sarah Boseley, ‘Philip Morris Waging Global Effort to Hobble Anti-smoking Treaty, Files Show’, The

Guardian (online), 14 July 2017, <https://www.theguardian.com/business/2017/jul/13/philip-morris-

international-tobacco-smoking-treaty?CMP=share_btn_tw>. 50 Department of Health (Aust), Introduction of Tobacco Plain Packaging in Australia (27 March 2016)

<http://www.health.gov.au/internet/main/publishing.nsf/content/tobacco-plain>.



Taskforce in 2009. There were market research reports, and there were further consultations

on the draft legislation to enact the scheme in Australia. Plain packaging of tobacco products

was considered to be a logical progression for tobacco control in Australia, given there was

already a range of other tobacco control measures leading up to it.51 And as noted by public

health researchers Simon Chapman and Becky Freeman, the Australian government has been

systematically evaluating the impact of plain packaging, since its introduction.52

There was an important early study by Wakefield and colleagues into the introduction effects

of the Australian plain packaging policy on adult smokers.53 The objective of the study was ‘to

determine whether smokers smoking from packs required under Australia’s plain packaging

law had different smoking beliefs and quitting thoughts, compared with those still smoking

from branded packs’.54 They undertook a cross-sectional telephone survey during the roll-out

phase of the law. The study involved 536 cigarette smokers with their usual brand, of whom

72.3 per cent were smoking from plain packaging, and 27.7 per cent were smoking from

branded packaging. The researchers found: ‘Compared with branded pack smokers, smokers

who were smoking from plain packs rated their cigarettes as being lower in quality and as

tending to be less satisfying than 1 year ago’.55 They argued that:

Given that Australia is the first nation to implement plain packaging, our study provides an

early investigation of its actual effects on smokers in a market where plain packs are available

to all, compared with past studies that have experimentally exposed smokers to a single

viewing of a plain or branded pack which may or may not have been their own brand, and

naturalistic studies that have mocked-up plain packs for smokers to carry around with them in

a trial situation.56

In 2015, the British Medical Journal published a special supplement of Tobacco Control,

containing the results of fifteen peer-reviewed articles on Australia’s tobacco plain packaging

legislation.57 This work showed that the specific objectives of plain packaging were achieved

and generally sustained among adult smokers.58 The Australian government’s Post-

Implementation Review of Tobacco Plain Packaging released in February 201659 concluded

that the tobacco plain packaging measure had begun to achieve its public health objectives of

reducing smoking in Australia. The review concluded:

[A]nalysis of Roy Morgan Single Source Survey Data shows that the 2012 packaging changes

(plain packaging combined with enhanced graphic health warnings) have contributed to

declines in smoking prevalence, even at this early time after implementation. The analysis

estimated that the 2012 packaging changes resulted in a ‘statistically significant decline in

51 Michelle Scollo, Megan Bayly, and Melanie Wakefield, ‘Plain Packaging: A Logical Progression for Tobacco

Control in One of the World’s “darkest markets”’ (2015) 24(Suppl 2) Tobacco Control ii3,

doi:10.1136/tobaccocontrol-2014-052048. 52 Simon Chapman and Becky Freeman, Removing the Emperor’s Clothes: Australia and Tobacco Plain

Packaging (Sydney University Press, 2014), 157–80. 53 Wakefield et al, above n 10. 54 Ibid. 55 Ibid. 56 Ibid. 57 Implementation and Evaluation of the Australian Plain Packaging Policy (2015) 24(Suppl 2) British Medical

Journal – Tobacco Control <http://tobaccocontrol.bmj.com/content/24/Suppl_2>. 58 Melanie Wakefield et al, ‘Australian Adult Smokers’ Responses to Plain Packaging With Larger Graphic Health

Warnings 1 Year After Implementation: Results From a National Cross-sectional Tracking Survey’ (2015)

24(Suppl 2) Tobacco Control <http://tobaccocontrol.bmj.com/content/24/Suppl_2/ii17.full#cited-by>. 59 Department of Health (Aust), Post-Implementation Review Tobacco Plain Packaging 2016 (2016),

<http://ris.dpmc.gov.au/2016/02/26/tobacco-plain-packaging/>.




smoking prevalence [among Australians aged 14 years and over] of 0.55 percentage points

over the post-implementation period, relative to what the prevalence would have been without

the packaging changes’. This decline accounts for approximately one quarter of the total

decline in average prevalence rates observed between the 34 months prior to implementation

of the measure and the 34 months following the implementation of the measure (the total

decline between the two periods was estimated as being 2.2 percentage points, with average

prevalence falling from 19.4% to 17.2%). …. [T]obacco plain packaging is achieving its aim

of improving public health in Australia and is expected to have substantial public health

outcomes into the future.60

Further work is still being done in this area. A study in October 2016 considered the impact of

Australia’s plain packaging of tobacco products among adolescents and young adults.61

The tobacco industry’s claims about plain packaging of tobacco products impacting upon

counterfeiting and smuggling have not been supported by evidence from customs in

Australia.62 Indeed, in the United Kingdom, the courts have been highly critical of the poor

evidence presented by the tobacco industry in their efforts to question the efficacy of plain

packaging of tobacco products.63 The strong empirical evidence of efficacy was an important

factor in terms of the defensibility of the plain packaging measure in the WTO.

C Evidence of the Efficacy of Plain Packaging in the WTO

In the executive summary of its argument, Australia emphasised the powerful evidence

supporting the efficacy of plain packaging of tobacco products.64 It noted:

Under the two principal provisions at issue in this dispute — Article 20 of the TRIPS

Agreement and Article 2.2 of the TBT Agreement — the complainants have assumed the

burden of proving that the tobacco plain packaging measure will make no contribution to its

public health objectives. …. The qualitative and quantitative evidence before the Panel, and

the complainants’ own contradictory arguments regarding the effects of the measure,

demonstrate that the complainants have failed to discharge this burden.65

Australia highlighted the important public health context of the dispute, noting that ‘this dispute

concerns a Member’s right to regulate the advertising and promotion of tobacco — a unique,

highly addictive product that kills half of its long-term users’.66 It also stressed the larger

international context of the global tobacco epidemic:

60 Ibid 4. 61 Sally Dunlop et al, ‘Australia’s Plain Tobacco Packs: Anticipated and Actual Responses among Adolescents

and Young Adults 2010–2013’ (2016) Tobacco Control

<http://tobaccocontrol.bmj.com/content/early/2016/11/15/tobaccocontrol-2016-053166.full>. 62 Amy Corderoy, ‘Tobacco Industry Claims on Impact of Plain Packaging Go Up in Smoke’, Sydney Morning

Herald (online), 12 March 2014 <http://www.smh.com.au/federal-politics/political-news/tobacco-industry-

claims-on-impact-of-plain-packaging-go-up-in-smoke-20140311-34kfc.html#ixzz2znabG7HE>. 63 British American Tobacco Limited and others v The Queen [2016] EWHC 1169 (Admin); British American

Tobacco UK Ltd & Ors v The Secretary of State for Health [2016] EWCA Civ 1182 (30 November 2016). 64 Australia, Certain Measures Concerning Trademarks, Geographical Indications and other Plain Packaging

Requirements Applicable to Tobacco Products and Packaging: Integrated Executive Summary of Australia’s

Submissions to World Trade Organization Panel (WT/DS435/441/458/ 467) 23 March 2016, 9

<http://dfat.gov.au/international-relations/international-organisations/wto/wto-dispute-

settlement/Documents/integrated-executive-summary-aus-submissions-tobacco-plain-packaging-ds435-441-

458-467.pdf>. 65 Ibid 1. 66 Ibid 1–2.



To combat the global epidemic of tobacco use, the FCTC requires comprehensive tobacco

control strategies in recognition that they are the most effective means of reducing the

incidence and prevalence of smoking. …. To be effective, such comprehensive strategies must

cover all aspects of supply and demand; apply to all tobacco products; optimize synergies

between complementary measures; and be continually refreshed and revised.67

Australia’s evidence considered a wide range of empirical research into the efficacy of plain

packaging of tobacco products, drawing upon economics, behavioural science, and marketing.

Indeed, the work of Cass Sunstein and Alberto Alemanno have highlighted how graphical

health warnings and plain packaging of tobacco products are a form of nudge economics, which

can help produce behavioural change.68 In fact plain packaging relies upon graphic design in

order to promote behavioural change in respect of smoking.69 In its conclusion to the executive

summary, Australia highlighted the larger ramifications of the dispute: ‘The complainants’

claims and arguments in this case threaten the essential right of a WTO Member… to decide

the level of protection it seeks to achieve when it comes to protecting the lives and wellbeing

of its citizens’.70 Australia insisted that ‘tobacco plain packaging is a legitimate public health

measure, based upon an extensive body of scientific evidence and the explicit

recommendations of the Parties to the FCTC’.71 In its view, ‘The evidence demonstrates that

the measure is already contributing to achieving Australia’s public health objectives and its

effects are likely to grow over the long term.’72 Australia’s strong health justifications seem to

be a key part of its victory in the WTO Panel Decision. 73

III THE TRIPS AGREEMENT 1994

The TRIPS Agreement lays down minimum standards for the protection of intellectual property

rights, including trademarks, patent law and copyright law. Article 8(1) clearly acknowledges

that ‘members may, in formulating or amending their laws and regulations, adopt measures

necessary to protect public health and nutrition, and to promote the public interest in sectors of

vital importance to their socio-economic and technological development, provided that such

measures are consistent with the provisions of this Agreement’. The UNCTAD-ICTSD

Resource Book on TRIPS and Development provides a useful account of the origins and nature

of Article 8:

Since language of a treaty is presumed not to be surplus, it would appear that Article 8.1 is to

be read as a statement of TRIPS interpretative principle: it advises that Members were expected

to have the discretion to adopt internal measures they consider necessary to protect public

67 Ibid 2. 68 Cass Sunstein, The Ethics of Influence: Government in the Age of Behavioural Science (Cambridge University

Press, 2016); Alberto Alemanno, ‘Unpacking Plain Packaging and Other Standardization Requirements in Light

of Behavioural Sciences’, in Alberto Alemanno and Enrico Bonadio (eds), The New Intellectual Property of

Health: Beyond Plain Packaging (Edward Elgar, 2016), 15–42. 69 Sarah Schrauwen, Lucienne Roberts, and Rebecca Wright, Can Graphic Design Save Your Life?

(GraphicDesign&, 2017); Oliver Wainwright, ‘Can Graphic Design Save Your Life? Review – Thrills, Pills and

Big Pharma’, The Guardian (online), 8 September 2017,

<https://www.theguardian.com/artanddesign/2017/sep/07/can-graphic-design-save-your-life-review-wellcome-

collection-london?CMP=share_btn_tw>. 70 Australia, ‘Certain Measures’, above n 64. 71 Ibid 40. 72 Ibid. 73 ‘Tobacco Industry Suffers Defeat as WTO Upholds Australia’s Plain Packaging laws’, Reuters (online), 5 May

2017 <https://www.theguardian.com/global/2017/may/05/australias-defeats-wto-challenge-to-plain-packaging-

of-tobacco>.




health and nutrition, and to promote the public interest in sectors of vital importance to their

socio-economic and technological development.74

Article 8 can and should inform the interpretation of the TRIPS Agreement, both as a whole,

and in its individual articles. Its operation is certainly not limited to pharmaceutical drugs or

patents. Indeed, Article 8 is not even limited to health-care. It refers to food security

(‘nutrition’), technology transfer and development (‘the public interest in sectors of vital

importance to their socio-economic and technological development’) and competition policy.

Philosophically, intellectual property is designed to promote the public interest, particularly in

respect of the promotion of public health. Nobel Laureate Joseph Stiglitz has emphasised the

need to provide proper recognition of public health and equality under intellectual property

rules in international trade agreements.75 Stiglitz and colleagues have also stressed the need to

ensure that intellectual property promotes the UN’s Sustainable Development Goals.76

The dispute over the plain packaging of tobacco products has raised larger issues in respect of

the relationship between intellectual property, public health, and trade.

A The Complainants

Confident that the regime was compatible with international trade law, Australia passed

legislation for the plain packaging of tobacco products in 2011.

In March 2012, Ukraine asked for consultations over Australia’s plain packaging regime.77

Ukraine argued that Australia’s measures, especially in the context of its comprehensive

tobacco regulatory regime, were inconsistent with Articles 1, 1.1, 2.1, 3.1, 15, 16, 20 and 27 of

the TRIPS Agreement. At the TRIPS Council, Ukraine complained that the plain packaging

requirements set forth in the legislation would violate a number of Australia’s WTO

obligations,78 and reiterated its strong concern that the Tobacco Plain Packaging Act 2011

(Cth) and its implementing regulations violated several provisions of the TRIPS Agreement, as

well as provisions of the Paris Convention as incorporated into TRIPS. Ukraine maintained

that Australia’s tobacco measures appeared to be neither necessary to protect health, nor

consistent with the provisions of the TRIPS Agreement.

At a meeting on 28 September 2012, the Dispute Settlement Bodies established a panel.

Initially, Argentina, Brazil, Canada, the Dominican Republic, Ecuador, the European Union,

Guatemala, Honduras, India, Indonesia, Japan, Korea, New Zealand, Nicaragua, Norway,

Oman, the Philippines, Singapore, Chinese Taipei, Turkey, the United States, Uruguay, Zambia

and Zimbabwe reserved their third party rights. Furthermore, Chile, China, Cuba, Egypt,

Nigeria, Malaysia, Malawi, Mexico, Moldova, Peru, and Thailand also reserved their third

party rights in the dispute.

74 United Nations Conference on Trade and Development and International Centre for Trade and Sustainable

Development, Resource Book on TRIPS and Development (Cambridge University Press, 2005). 75 Joseph Stiglitz, Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump (WW

Norton & Company, 2017), 40–43. 76 Dean Baker, Arjun Jayadev and Joseph Stiglitz, Innovation, Intellectual Property, and Development: A Better

Set of Approaches for the 21st Century (AccessIBSA, 2017) <http://ip-unit.org/wp-content/uploads/2017/07/IP-

for-21st-Century-EN.pdf>. 77 Ukraine v Australia — Certain Measures Concerning Trademarks and Other Plain Packaging Requirements

Applicable to Tobacco Products and Packaging (World Trade Organization, Dispute No 434),

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm>. 78 WTO, Council for TRIPS Meeting, above n 36, [196].



Four other complainants subsequently joined the dispute, requesting consultations with

Australia concerning certain Australian laws and regulations that impose trademark restrictions

and other plain packaging requirements on tobacco products and packaging,79 beginning with

Honduras on 4 April 2012. Honduras claimed that Australia’s measures appeared to be

inconsistent with its obligations under Articles 2.1, 3.1, 15.4, 16.1, 20, 22.2(b) and 24.3 of the

TRIPS Agreement. At the TRIPS Council, Honduras expressed fears that producers and

importers of affected tobacco products would be obliged to adopt standardized packaging and

would at the same time be prevented from using their legitimate intellectual property rights on

the packaging.80 In its view, Honduras believed that this requirement would violate Article 20

of the TRIPS Agreement. That Article establishes that the use of a trademark could not be

unjustifiably encumbered in trade operations by specific requirements such as the use with

another trademark, the use in a special form, or use in a manner which could undermine the

ability for the brand to distinguish the goods or services of one company from those of other

companies.81 Honduras argued that plain packaging measures created a serious risk of

confusion between competing tobacco products.

On the 18 July 2012, the Dominican Republic joined the dispute,82 claiming that Australia’s

measures were inconsistent with Australia’s obligations under Articles 2.1, 3.1, 15.4, 16.1, 20,

22.2(b) and 24.3 of the TRIPS Agreement. At the TRIPS Council, the Dominican Republic

maintained that Australia’s plain packaging measures were a threat to intellectual property

rights which were vital for international trade and should be a matter of concern to each and

every Member.83 It argued that Australia’s plain packaging measures would eliminate the

distinctive features of tobacco sector products by banning designs and trademarks, as well as

by prescribing standardised packaging, and the measures would negate intellectual property

rights.

In May 2013, Cuba joined the dispute.84 The Republic of Cuba is a major producer of cigars,85

as reported by The New York Times: ‘Cigar sales are handled by Habanos, a 50-50 joint venture

between the Cuban state tobacco company and Altidis, a unit of Imperial Tobacco’.86 It is a

curious irony that Communist Cuba should support the capitalist tobacco industry in the

challenge to Australia’s plain packaging regime. Cuba also claimed that Australia’s measures

were inconsistent with its obligations under Articles 2.1, 3.1, 15.4, 16.1, 20, 22.2(b) and 24.3

of the TRIPS Agreement.87 It argued that Australia breaches Article 20 because ‘Australia

unjustifiably encumbers the use of trademarks for tobacco products in the course of trade

79 Honduras v Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain

Packaging Requirements Applicable to Tobacco Products and Packaging (WTO, Dispute No DS435)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds435_e.htm>. 80 WTO, Council for TRIPS Meeting, above n 36, [193]. 81 Ibid [194]. 82 Dominican Republic v Australia — Certain Measures Concerning Trademarks, Geographical Indications and

Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging (WTO, Dispute No DS441)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds441_e.htm>. 83 WTO, Council for TRIPS Meeting, above n 36, [157]. 84 Cuba v Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain


<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds458_e.htm>. 85 David Jolly, ‘Cuba Challenges Australian Tobacco Rules’, The New York Times (online), 6 May 2013,

<http://www.nytimes.com/2013/05/07/business/global/07iht-smoke07.html?_r=3&>. 86 Ibid. 87 Cuba v Australia (WTO Dispute No DS458)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds458_e.htm>.




through special requirements’,88 because it mandates: (i) that trademarks relating to tobacco

products be used in a special form, and (ii) that trademarks relating to tobacco products be used

in a manner which is detrimental to their capability to distinguish tobacco products of one

undertaking from tobacco products of other undertakings. Cuba complained that the Australian

Bill had created tension between the right of governments to protect human health, and the

commercial interests associated with tobacco consumption.89 Cuba was concerned that the

requirement of standard packaging would have an impact on advertising and consumption of

tobacco. The delegate lamented that Cuban cigars had been the target of counterfeiting for

many years and in many markets,90 and Cuba was concerned that plain packaging would defeat

its anti-counterfeiting measures; and that it would no longer be possible to use the ‘Habano’

designation of origin seal or the national guarantee of origin seal used by the Republic of Cuba

on its cigars; and that it would be prevented from applying the brand name and the place of

origin, La Habana, Cuba, to the rings on cigars.

Indonesia then joined the fray in September 2013.91 Indonesia alleged breaches of the TRIPS

Agreement, the TBT Agreement, and GATT. There was much debate about this action –

especially given that Indonesia is a close neighbour of Australia, and a previous disputant over

trade and tobacco control in the WTO.92

A number of countries have expressed support for these complainants. El Salvador raised

concerns about Australia’s Tobacco Plain Packaging Bill and its compatibility with the TRIPS

Agreement.93 Zimbabwe’s delegation shared the concerns expressed by the Dominican

Republic and other delegations as regards the likely consequences for consumers and producers

of tobacco products of the plain packaging measures being put in place by Australia.94 Chile

had serious doubts that imposing plain packaging for cigarettes was the least trade restrictive

measure available and that it was consistent with certain provisions of the TRIPS Agreement,

in particular Article 20.95 Mexico’s delegation was sensitive to the legitimate objectives sought

by Australia, which served as a basis for its Plain Packaging Bill, but shared some of the

concerns of Chile. Ecuador was concerned about the impact of the plain packaging upon

commercial sales of tobacco, and local farming communities.96

B Australia

In June 2011, the Australian government notified the TRIPS Council of its intention to

88 Ibid. 89 WTO, Council for TRIPS Meeting, above n 36, [181]. 90 Ibid [186]. 91 Indonesia v Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain


<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds467_e.htm>. 92 ‘Indonesia Becomes Fifth to File WTO Case against Australia Tobacco Plain Packaging’, Intellectual Property

Watch, 22 September 2013 <http://www.ip-watch.org/2013/09/22/indonesia-becomes-fifth-to-file-wto-case-

against-australia-tobacco-plain-packaging/>; AFP, ‘Indonesia to Challenge Australia’s Plain Packaging Tobacco

Laws at World Trade Organisation’, ABC News (online), 27 March 2014, <http://www.abc.net.au/news/2014-03-

27/new-wto-challenge-to-australia-plain-packaging-tobacco-law/5348078>; Helen Davidson, ‘Indonesia Granted

Right to Challenge Australia’s Plain Packaging Laws’, The Guardian (online), 27 March 2014

<http://www.theguardian.com/world/2014/mar/27/indonesia-granted-right-to-challenge-australias-plain-

packaging-laws>. 93 WTO, Council for TRIPS Meeting, above n 36, [187]. 94 Ibid [210]. 95 Ibid [207]. 96 Ibid [216].



introduce plain packaging of tobacco products.97 The Australian statement emphasised that

‘Australia’s Plain Packaging legislation was a legitimate and appropriate measure which would

make a significant contribution to protecting the health of Australians’.98 Australia pointed out

that ‘Tobacco packaging was one of the last remaining forms of tobacco advertising in

Australia and the plain packaging legislation was therefore the next logical step in Australia’s

tobacco control efforts’.99 The statement highlighted:

The plain packaging of tobacco products was designed to reduce the attractiveness and appeal

of tobacco products to consumers, particularly young people; to increase the noticeability and

effectiveness of mandated health warnings; to reduce the ability of the tobacco product and its

packaging to mislead consumers about the harms of smoking; and, through the achievement

of these aims in the long term, as part of a comprehensive suite of tobacco control measures,

contribute to efforts to reduce smoking rates.100

It stressed that the ‘Guidelines agreed by the Conference of the Parties to the WHO Framework

Convention on Tobacco Control (FCTC) in 2008 for the implementation of Articles 11 and 13

of the FCTC recommended that Parties consider the introduction of plain packaging’.101

Further,

The proposed legislation was consistent with recommendations made to the Government by

Australia’s National Preventative Health Taskforce which had been based on extensive

research evidence that explored the impacts of tobacco packaging and tested the reactions of

respondents exposed to different packaging options under experimental conditions. The weight

of the evidence indicated that a plain packaging requirement, as part of a comprehensive suite

of tobacco control measures, would help to reduce smoking rates.102

Australia emphasised that the plain packaging regime was compatible with its international

obligations to protect intellectual property rights under the TRIPS Agreement: ‘In framing its

policy on plain packaging, Australia had paid full regard to its obligations under the TRIPS

Agreement 1994 and would ensure that the new policy was implemented in a manner consistent

with that Agreement’.103 The Australian delegate stressed ‘that amendments to the Tobacco

Plain Packaging Bill had been proposed to ensure trademark owners’ ability to protect their

trademarks from use by other persons, and the ability to register and maintain the registration

of a trademark had been preserved’.104

In its executive summary, Australia maintained that the complainants had failed to demonstrate

that the tobacco plain packaging measure was inconsistent with the TRIPS Agreement.105

Indeed, Australia argued that its opponents’ ‘claims are based on theories of “interests” that

supposedly “pervade” the TRIPS Agreement 1994, and on attempts to rewrite various

provisions of the TRIPS Agreement 1994 to create rights and obligations that do not exist in

the text itself’.106 First, Australia contended that the complainants failed to demonstrate that

97 WTO, Council for TRIPS Meeting (Minutes of the Meeting of June 2011), IP/C/M/67.

98 WTO, Council for TRIPS Meeting, above n 36, [178]. 99 Ibid [180] 32, quoting Minutes of TRIPS Council Meeting, June 2011 (IP/C/M/66) recording Australian

Statement. 100 Ibid [180] 33. 101 Ibid [179] 31. 102 Ibid. 103 Ibid [179] 32. 104 Ibid [176]. 105 Australia, Certain Measures, above n 64. 106 Ibid 16.




the measure was inconsistent with Article 20 of the TRIPS Agreement, and that ‘the

complainants have failed to establish a prima facie case that the tobacco plain packaging

measure imposes “special requirements” that “encumber” the “use of a trademark in the course

of trade”’.107 Australia noted: ‘The relevant “use” of a trademark under Article 20 … is the use

of a trademark to distinguish the goods or services of one undertaking from those of other

undertakings’,108 and insisted that ‘the use of trademarks to advertise and promote the

trademarked product is not a relevant “use” of trademarks under Article 20’.109 Australia also

observed that ‘The complainants have not even attempted to demonstrate that the tobacco plain

packaging measure encumbers the relevant use of trademarks in the course of trade.’110

Second, Australia maintained that ‘Article 20 of the TRIPS Agreement does not encompass the

aspects of the tobacco plain packaging measure which prohibit the use of trademarks on

tobacco packaging and products’.111 Third, Australia said that the ‘complainants’ interpretation

of the term “unjustifiably” is unfounded’.112 In conclusion, Australia observed that the

complainants failed to show that the tobacco plain packaging measure is inconsistent with

Article 20 of the TRIPS Agreement:

The complainants have failed to show that the measure encumbers by special requirements the

relevant ‘use’ of a trademark to distinguish the goods of one undertaking from those of other

undertakings in the course of trade, and have therefore failed to establish the threshold

applicability of Article 20. The use of trademarks to advertise and promote tobacco products

is not a relevant ‘use’ of trademarks under Article 20. Any encumbrance upon this use is

therefore irrelevant to establishing the applicability of Article 20.113

Moreover, ‘The complainants have failed to provide a coherent interpretative or factual basis

for their assertion that the prohibitive elements of the tobacco plain packaging measure are

“special requirements” that fall within the scope of Article 20, while other widely-adopted

measures that affect the use of a trademark do not’.114 Furthermore, Australia maintained:

‘Assuming arguendo that these prohibitive elements do fall within the scope of Article 20, the

complainants have failed to demonstrate that the measure as a whole encumbers the relevant

use of a trademark’.115 The case of Australia in relation to the interpretation of the TRIPS

Agreement is a plausible and persuasive argument.

C Academic Debate

There has also been a significant scholarly debate over plain packaging of tobacco products

and the TRIPS Agreement. Back in 2008, I made the case — along with my public health

colleagues — that the plain packaging of tobacco products was indeed compatible with the

strictures of TRIPS.116 Our research into the internal documents of the tobacco industry

revealed that the industry had been preparing for international trade, investment, and

107 Ibid 17. 108 Ibid. 109 Ibid 18. 110 Ibid. 111 Ibid 20. 112 Ibid. 113 Ibid 28. 114 Ibid. 115 Ibid. 116 Becky Freeman, Simon Chapman and Matthew Rimmer, ‘The Case for the Plain Packaging of Tobacco

Products’ (2008) 103 Addiction 580.



intellectual property challenges in the 1990s. The internal documents also highlighted that the

tobacco industry had private doubts about whether such challenges would be successful.

Further insights into the tactics of the tobacco industry can be gained by more recent

revelations. In 2017, the Reuters press agency published internal documents of Philip Morris,

which detail its strategies to use intellectual property and international trade to delay the

introduction of plain packaging of products.117

A number of other academics have been confident that the plain packaging of tobacco products

is compatible with the TRIPS Agreement. University of Melbourne trade scholars, Tania Voon

and Andrew Mitchell, comment: ‘Interpreting TRIPS Article 20 in the light of Articles 7 and

8 and the Doha Declaration, it seems incontrovertible that a public health objective could

justify an encumbrance under TRIPS Article 20’.118 Treatise writer, Nuno Pires de Carvalho,

observes that Article 20 of the TRIPS Agreement presents no such obstacle to special

requirements in respect of the designation of tobacco, because such measures are justifiable.119

Jayashree Watal has maintained that ‘Article 20 allows for justifiable encumbrances and these

can be considered as permitted by TRIPS language’ and that fears about special requirements

on tobacco labels and packaging have been excessive.120 Professor Ben McGrady from

Georgetown University maintains that plain packaging, as implemented by Australia, is

consistent with WTO law.121 Professor Mark Davison from Monash University, clearly the pre-

eminent scholar on trademark law in Australia, has maintained that Australia’s plain packaging

regime is compatible with the TRIPS Agreement.122 He has noted that ‘the WTO tends to be

cautious in its approach to interpretation of provisions in the relevant agreements as taking

interpretative licence may tend to undermine the political consensus underpinning the

WTO’.123 He concludes that ‘the claims made by tobacco trademark owners are dependent on

an expansive approach to their intellectual property rights unsupported by the wording or the

objectives of TRIPS.’124 Enrico Bonadio has maintained that ‘under the TRIPS Agreement and

the Paris Convention trademark registrations do not offer a positive right to use the sign, but

117 The Philip Morris Files: The Secrets of the World’s Biggest Tobacco Company, Reuters Investigates (2017)

<https://www.reuters.com/investigates/section/pmi/>; Aditya Kalra et al, ‘Inside Philip Morris’s Campaign to

Subvert the Global Anti-Smoking Treaty’, Reuters (online), 13 July 2017,

<https://www.reuters.com/investigates/special-report/pmi-who-fctc/ >. 118 Tania Voon and Andrew Mitchell, ‘Implications of WTO Law for Plain Packaging of Tobacco Products’ in

Andrew Mitchell, Tania Voon and Jonathan Liberman (eds), Public Health and Plain Packaging of Cigarettes:

Legal Issues (Edward Elgar, 2012), 109–36. 119 Nuno Pires De Carvalho, The TRIPS Regime of Trademarks and Designs (Kluwer Law International, 2007). 120 Jayashree Watal, Intellectual Property Rights in the WTO and Developing Countries (Kluwer, 2001), 252. 121 Benn McGrady, ‘Revisiting TRIPS and Trademarks: The Case of Tobacco’ (2012) Social Science Research

Network, <http://ssrn.com/abstract=2144269>. 122 Mark Davison, ‘Plain Packaging of Cigarettes: Would it Be Lawful?’ (2010) 23 (5) Australian Intellectual

Property Law Bulletin; Mark Davison, ‘The Legitimacy of Plain Packaging Under International Intellectual

Property Law: Why There is No Right to Use a Trademark Under Either the Paris Convention or the TRIPS

Agreement’ in Andrew Mitchell, Tania Voon and Jonathan Liberman (eds), Public Health and Plain Packaging

of Cigarettes: Legal Issues (Edward Elgar, 2012), 81–108; Mark Davison, ‘Plain Packaging of Tobacco and the

“Right” to Use a Trade Mark’ (2012) 8 European Intellectual Property Review 498; Mark Davison and Patrick

Emerton, ‘Rights, Privileges, Legitimate Interests, and Justifiability: Article 20 of TRIPS and Plain Packaging of

Tobacco’, (2013) American University International Law Review (forthcoming)

<http://ssrn.com/abstract=2322043>; Mark Davison, ‘Plain Packaging and the TRIPS Agreement: A Response to

Professor Gervais’ (2013) 23 Australian Intellectual Property Journal 160. 123 Mark Davison, ‘Plain Packaging of Tobacco Products and the WTO Challenge’ in Alberto Alemanno and

Enrico Bonadio (ed), The New Intellectual Property of Health: Beyond Plain Packaging (Edward Elgar, 2016),

163–83, 183. 124 Ibid.




just a negative right to prevent third parties from exploiting the brand’.125 Such a position is

buttressed by a previous WTO Panel ruling in a complaint by the United States against the

European Communities, in respect of trademark law and geographical indications.126

Civil society has also voiced its views about the claims of the tobacco industry. Deborah Arnott,

Chief Executive of health charity ASH said: ‘The claim that Australia’s tobacco plain

packaging infringes WTO agreements is ill founded and has little or no chance of success’127

Alberto Alemanno comments that standardization measures are also used in other contexts in

addition to tobacco, including in respect of alcohol, unhealthy foods, baby formulas, and

pharmaceuticals.128 He suggests that ‘this emerging category of packaging requirements can,

despite their intrusive nature (notably on trademarks), somehow be accommodated within IP

regimes.’129

The reported WTO Panel Decision supports the view of such academic commentary that plain

packaging of tobacco products is compatible with the TRIPS Agreement.

IV THE TBT AGREEMENT 1994

In the dispute over Australia’s plain packaging of tobacco products before the WTO, a number

of the complainants raised the question of technical barriers to trade, alleging among other

things that Australia’s regime of plain packaging was inconsistent with Articles 2.1 and 2.2 of

the TBT Agreement.130 Article 2.2 of the TBT Agreement provides:

Members shall ensure that technical regulations are not prepared, adopted or applied with a

view to or with the effect of creating unnecessary obstacles to international trade. For this

purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a

legitimate objective, taking account of the risks non-fulfilment would create. Such legitimate

objectives are, inter alia: ...protection of human health or safety.131

Moreover, it states: ‘In assessing such risks, relevant elements of consideration are, inter alia:

available scientific and technical information, related processing technology or intended end-

uses of products.’132

The WTO’s World Trade Report for 2012 places particular emphasis upon technical barriers

to trade in.133 In his foreword, Pascal Lamy emphasised that there were a number of reasons

why we should take matters of non-tariff measures (‘NTMs’) seriously:

125 Enrico Bonadio, ‘On the Nature of Trademark Rights: Does Trademark Registration Confer Positive or

Negative Rights?’ in Alberto Alemanno and Enrico Bonadio (ed) The New Intellectual Property of Health:

Beyond Plain Packaging (Edward Elgar, 2016), 43–68, 68. 126 European Communities — Protection of Trademarks and Geographical Indications for Agricultural

Products and Foodstuffs, (WTO, Dispute No DS174),

<https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds174_e.htm>. 127 ASH, above n 18. 128 Alemanno, above n 68. 129 Ibid 42. 130 Ukraine v Australia (WTO Dispute No 434)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm>. 131 TBT Agreement, above n 27. 132 Ibid. 133 World Trade Organization, World Trade Report 2012: Trade and Public Policies: A Closer Look at Non-Tariff

Measures in the 21st Century (2012) <http://www.wto.org/english/res_e/publications_e/wtr12_e.htm>.



A clear trend has emerged over the years in which NTMs are less about shielding producers

from import competition and more about the attainment of a broad range of public policy

objectives. You could say we are moving from protection to precaution. This tendency is

discernible in practically every economy, as concerns over health, safety, environmental

quality and other social imperatives gain prominence.134

The topic of technical barriers to trade has become increasingly important, with significant

battles in the WTO over matters such as tobacco control and the plain packaging of tobacco

products; measures dealing with harmful products like asbestos; and environmental and

consumer measures like eco-labelling.

Jeff Weiss from the Office of the US Trade Representative (‘USTR’) has discussed the

evolution of WTO jurisprudence on technical barriers to trade.135 He observed that there had

been two main developments since the adoption of the TBT Agreement. First was ‘the

agreement by the WTO Committee on Technical Barriers to Trade in 2000 on a set of principles

for the development of international standards, namely: (1) openness, (2) transparency, (3)

impartiality and consensus, (4) relevance and effectiveness, (5) coherence and (6) the

development dimension’.136 Second, ‘members now recognize that, with tariff levels generally

falling around the world, the biggest obstacles faced by industries are often “behind the border”

barriers, including problematic standards-related measures’.137 Weiss observed that the USTR

had published an annual report to ‘document the steps taken by the Obama administration to

address standards-related barriers to U.S. exports’.138

There has also been a complex dispute between Indonesia and the United States over the

regulation of clove cigarettes in the WTO.139 In 2010, Indonesia requested consultations with

the United States regarding a provision of the Family Smoking Prevention Tobacco Control

Act of 2009 (US), which banned clove cigarettes, but excluded menthol-flavoured cigarettes

from the ban. Indonesia claimed that the provision was inconsistent with GATT, Article 2 of

the TBT Agreement, and the Agreement on the Application of Sanitary and Phytosanitary

Measures.140 A Panel report was released in September 2011 and an Appellate report in April

2012. Professor Tania Voon has summarised the WTO Appellate Report,141 observing that

‘this decision makes clear that WTO Members implementing tobacco-control measures and

other labelling and packaging requirements must refrain from discriminating in law or fact

against imports, except to the extent that such discrimination arises “exclusively from a

legitimate regulatory distinction”’.142 Professor Lawrence Gostin lamented: ‘What is most

worrying about the clove cigarettes case was that the WTO trampled on a historic public health

law fashioned after years of political compromise — as all democratic institutions must

134 Ibid. 135 ‘International Trade and Standards: An Interview with Jeff Weiss, Office of the US Trade Representative’,

ASTM Standardization News, May/June 2011

<http://www.astm.org/SNEWS/MJ_2011/provocative_mj11.html>. 136 Ibid. 137 Ibid. 138 Ibid. 139 Indonesia v United States — Measures Affecting the Production and Sale of Clove Cigarettes (Panel Report 2

September 2011, Appellate Report, 4 April 2012)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds406_e.htm>. 140 Agreement on the Application of Sanitary and Phytosanitary Measures (‘SPS Agreement’), opened for

signature in Marrakesh 14 April 1994, entered into force 1 January 1995. 141 Tania Voon, ‘Note on WTO Appellate Body Report in US — Clove Cigarettes’ (2012) 106 American Journal

of International Law <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2143804>. 142 Ibid.




compromise’.143 Professor Jane Kelsey has also explored the significance of the dispute in US-

Clove Cigarettes for other tobacco control measures, such as the plain packaging of tobacco

products.144

In its complaint to the WTO about Australia’s plain packaging regime, Ukraine alleged the

measures were inconsistent with Articles 2.1 and 2.2 of the TBT Agreement.145 Honduras made

a similar complaint,146 and the Dominican Republic also aired objections about technical

barriers to trade.147 Cuba complained that Australia violated Article 2.1 of the TBT Agreement

because it imposed technical regulations that applied less favourable treatment to imported

tobacco products treatment than that applied to like products of national origin.148 Cuba also

contended that the plain packaging regime was inconsistent with Article 2.2 because Australia

imposed technical regulations that created unnecessary obstacles to trade and are more trade-

restrictive than necessary to fulfil a legitimate objective, taking into account the risks that non-

fulfilment would create. Indonesia has made similar complaints.149

In response to Indonesia’s complaint, Australia said in a statement that ‘tobacco plain

packaging is a sound, well-considered measure designed and based on a broad range of

scientific studies and reports to achieve a legitimate objective — the protection of public

health’.150 Australia also cited the view of the WHO about the need for global action in respect

of the ‘tobacco epidemic’. Furthermore, Australia highlighted the terrible health burden placed

upon Indonesia because of tobacco. The Australian representatives ‘remarked that Indonesia

might look favourably upon such health measures, as a substantive majority of Indonesian

males are smokers, and the country is estimated to have the second highest male smoking rate

in the world’.151

Australia robustly defended the consistency of plain packaging of tobacco products with the

TBT Agreement, arguing in its executive summary that the complainants failed to establish a

prima facie case that the tobacco plain packaging measure is inconsistent with Article 2.2 of

the TBT Agreement:152

143 Gostin, above n 24, 238. 144 Jane Kelsey, International Trade Law and Tobacco Control: Trade and Investment Law Issues relating to

Proposed Tobacco Control Policies to Achieve an Essentially Smoke Free Aotearoa New Zealand by 2025: A

report to the New Zealand Tobacco Control Research Tūranga (2012) 27. See also Jane Kelsey, Hidden Agendas:

What We Need to Know About the Trans-Pacific Partnership Agreement (BWB Books, 2013); and WTO, World

Trade Report 2012, above n 133. 145 Ukraine v Australia (WTO Dispute No 434)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds434_e.htm>. 146 Honduras v Australia (WTO Dispute No DS435)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds435_e.htm>. 147 Dominican Republic v Australia (WTO Dispute No DS441)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds441_e.htm>. 148 Cuba v Australia (WTO Dispute DS 458)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds458_e.htm>. 149 Indonesia v Australia (WTO Dispute No DS467)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds467_e.htm>, 150 William New, ‘Australia Accepts Indonesia WTO Dispute On Tobacco Packaging; Calls For Five Disputes To

Be Joined’, Intellectual Property Watch, 27 March 2014 <http://www.ip-watch.org/2014/03/27/australia-accepts-

indonesia-wto-dispute-on-tobacco-packaging-calls-for-five-disputes-to-be-joined/>. 151 Ibid. 152 Australia, Certain Measures, above n 64.



The tobacco plain packaging measure is entitled to the presumption in Article 2.5 that it does

not constitute an unnecessary obstacle to international trade, and the complainants have failed

to rebut that presumption with the type of evidence required. Even if the complainants’ claims

were found to overcome that fundamental hurdle, the complainants have also failed to establish

a prima facie case that the tobacco plain packaging measure is trade-restrictive at all, let alone

that it is more trade-restrictive than necessary having regard to the contribution it makes to its

public health objectives and the risks that non-fulfilment of those objectives would create.153

Australia stated that it had ‘enacted its tobacco plain packaging measure in accordance with

the FCTC Guidelines, which set out the relevant international standard for the plain packaging

of tobacco products’,154 and argued that the complainants failed to make a prima facie case that

the measure was trade restrictive under Article 2.2 of the TBT Agreement,155 but instead had

tried to artificially expand the definition of trade-restrictiveness.156 Australia stated: ‘None of

the complainants has substantiated its claims that the tobacco plain packaging measure entails

compliance costs, or increases barriers to market entry, such as to constitute a limiting effect

on international trade in tobacco products’,157 contending that ‘the complainants have failed in

their attempt to establish that the tobacco plain packaging measure is not capable of

contributing to its objectives of reducing the use of and exposure to tobacco products in

Australia.’158 Australia commented:

[T]he overwhelming weight of the qualitative evidence unequivocally establishes that, by

prohibiting tobacco packaging from being used to advertise and promote tobacco products —

and thereby reducing the appeal of tobacco products, increasing the effectiveness of graphic

health warnings, and reducing the ability of tobacco packaging to mislead consumers — the

tobacco plain packaging measure is capable of discouraging smoking initiation and relapse,

encouraging cessation, and reducing people’s exposure to tobacco products. The quantitative

evidence corroborates this conclusion, and is consistent with the tobacco plain packaging

measure operating synergistically with other elements of Australia’s comprehensive tobacco

control policy to reduce further the use of tobacco products and exposure to tobacco smoke in

Australia. …. The complainants have thus failed entirely to discharge their burden of

establishing that the tobacco plain packaging measure is incapable of contributing to its public

health objectives.159

Furthermore, Australia observed that the complainants had failed to established that the risks

arising from non-fulfilment of the measure’s objectives are not grave: ‘Properly interpreted,

the risks that would arise from the non-fulfilment of the public health objectives of the tobacco

plain packaging measure are significant and grave, and the consequences would include

increased tobacco-related deaths and disease in Australia.’160

Australia also noted that

three of the complainants’ four purported ‘alternatives’ — an increase in excise tax, an increase

in the minimum legal purchase age for tobacco products, and improved social marketing

153 Ibid 32. 154 Ibid. 155 Ibid 34. 156 Ibid 35. 157 Ibid. 158 Ibid 36. 159 Ibid. 160 Ibid 37.




campaigns — are not alternatives at all, as they constitute variations on existing elements of

Australia’s comprehensive tobacco control policy.161

It noted further that, regarding ‘the only actual alternative measure the complainants propose

— a pre-vetting scheme — the complainants have failed to provide any credible evidence or

argument to support their implausible assertion that the scheme would make “an equivalent or

greater contribution” to that of the tobacco plain packaging measure’.162

The WHO has also defended the position of Australia in a statement at the WTO Committee

on Technical Barriers to Trade.163 The position of Australia seems to have been validated by

the WTO Panel Decision.

V GATT

There have also been a number of complaints that Australia’s plain packaging regime does not

meet the requirements of GATT.164 Honduras, the Dominican Republic, Cuba, and Indonesia

(and Ukraine to begin with) contended that Australia’s tobacco regulatory regime appears to

be inconsistent with Article III:4 of GATT, which provides that:

The products of the territory of any contracting party imported into the territory of any other

contracting party shall be accorded treatment no less favourable than that accorded to like

products of national origin in respect of all laws, regulations and requirements affecting their

internal sale, offering for sale, purchase, transportation, distribution or use.

Moreover, it states that: ‘The provisions of this paragraph shall not prevent the application of

differential internal transportation charges which are based exclusively on the economic

operation of the means of transport and not on the nationality of the product.’ Tania Voon and

Andrew Mitchell comment that the ‘Australian plain packaging requirements and associated

offences themselves are expressed in non-discriminatory terms and would apply equally to

domestic (that is, locally manufactured) and imported tobacco products’.165 They observe that

‘no de facto discrimination is likely to arise in their application because the requirements do

not make any other distinctions that might affect local and imported products differently’,166

and conclude that Australia’s plain packaging regime does not ‘breach the GATT 1994 because

it is non-discriminatory, with a limited impact on international trade and a sound public health

basis’.167

In its complaint, Cuba also argued that Australia’s plain packaging measures appear to be

inconsistent with its obligations under GATT, in particular, that the measures violated Article

IX:4, because ‘Australia imposes requirements relating to the marking of imported cigar

products which materially reduce their value and/or unreasonably increase their cost of

production’.168 In its executive summary, Australia also addressed the GATT arguments,169 in

161 Ibid 38. 162 Ibid. 163 World Health Organization, ‘WHO and FCTC Joint Statement’, above n 43. 164 General Agreement on Tariffs and Trade, above n 28. 165 Voon and Mitchell, above n 118, 135. 166 Ibid. 167 Ibid 136 168 Cuba v Australia (WTO Dispute No DS 458)

<http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds458_e.htm>. 169 Australia, Certain Measures: Integrated Executive Summary, above n 64.



particular, arguing that Cuba had failed to establish a prima facie case under Article IX:4,170

and that ‘Cuba has failed to establish that measures affecting marks other than country of origin

marks fall within the scope of Article IX’.171 In any case, Australia said that ‘the Appellate

Body has unambiguously confirmed that Article IX only disciplines measures that require

marks of origin, not measures that prohibit such markings’.172 Moreover, Australia maintained

that ‘Cuba has failed to substantiate its assertion that there has been any reduction in the value

of Cuban LHM cigars since the introduction of the tobacco plain packaging measure, let alone

to demonstrate a “material” reduction that is attributable to the prohibition on the use of the

mark “Habanos”’.173

The position of Australia appears to have been upheld by the WTO Panel decision, although

final publication of the decision will obviously shed further light on the Panel’s reasoning.

VI THIRD PARTIES

An important feature of the WTO Panel dispute has been the participation of a large number

of third parties. Australia’s position in respect of plain packaging of tobacco products under

the TRIPS Agreement, the TBT Agreement, and GATT has been reinforced by a number of other

countries pioneering public health. Other countries, including the United Kingdom,174

Ireland,175 France,176 and New Zealand,177 have passed legislative measures in respect of the

plain packaging of tobacco products. The ‘next generation’ of countries showing an interest in

the introduction of standardized tobacco control measures include Norway, Sweden, Finland,

Hungary, Slovenia, Canada, Singapore, Turkey, and South Africa.178

A New Zealand

Professor Jane Kelsey of the University of Auckland has provided a lengthy analysis of New

Zealand’s position in respect of plain packaging, public health, and international trade:

‘Possible interpretations of the TRIPS provisions and exceptions provide some comfort for

New Zealand’s proposed policies, but they are yet to be tested’.179 She has also highlighted

ways that New Zealand could promote tobacco control policies, through notification of

measures to the WTO; discussion at the WTO’s TBT Committee, and TRIPS Council; the

WTO Trade Policy Review mechanism; and the WTO dispute mechanism. The government of

170 Ibid 38. 171 Ibid. 172 Ibid. 173 Ibid 38–9. 174 Tobacco and Related Products Regulations 2016 (UK); and British American Tobacco Limited and others v

The Queen [2016] EWHC 1169 (Admin); and British American Tobacco UK Ltd & Ors v The Secretary of State

for Health [2016] EWCA Civ 1182. 175 Public Health (Standardised Packaging of Tobacco) Act 2015 (Irel). 176 Decret No 2016-334 du 21 Mars 2016 Relatif au Paquet Neuter des Cigarettes et de Certains Produits du Tabac

(France) <https://www.legifrance.gouv.fr/eli/decret/2016/3/21/AFSP1603141D/jo> [Decree No 2016-334 of 21

March 2016 Regarding Plain Packaging of Cigarettes and Certain Tobacco Products]; Société JT International

SA, Société d'Exploitation Industrielle des Tabacs et des Allumettes, Société Philip Morris France SA and Others

(State Council of France, CE, 23 December 2016). 177 Smoke-free Environments (Tobacco Standardised Packaging) Amendment 2016 (NZ). 178 For a summary, see Canadian Cancer Society, Cigarette Package Health Warnings: International Status

Report (5th ed, 2016)

<https://www.cancer.ca/~/media/cancer.ca/CW/for%20media/Media%20releases/2016/CCS-international-

cigarette-packaging-report-2016-English.pdf?la=en>. 179 Kelsey, International Trade Law and Tobacco Control, above n 144.




New Zealand has welcomed the Australian government’s decision to legislate for the plain

packaging of tobacco products, the TRIPS Council minutes recording:

The negative effects of smoking, which was the leading preventable cause of early death in

New Zealand, could not be overstated. It was within a Member’s right to implement necessary

measures in order to protect public health. [New Zealand’s] delegation noted the clear

assurances by Australia that it had paid close attention to and respected its WTO obligations

in developing its plain packaging proposal. [New Zealand] noted the numerous scientific

studies which demonstrated that plain packaging of tobacco products could lead to positive

public health outcomes by reducing the attractiveness and desirability of smoking and by

increasing the prominence of public health warnings. It was [New Zealand’s] view that plain

packaging, as part of a comprehensive suite of tobacco control measures, could contribute to

efforts to reduce smoking rates.180

New Zealand’s Parliament conducted hearings on the scheme for the plain packaging of

tobacco products in 2014,181 and passed the implementing legislation in 2016.182 Then Prime

Minister, John Key, initially would have preferred to put the regime into operation, after the

conclusion of the WTO dispute. The Associate Minister for Health, the Hon Peseta Sam Lotu-

liga commented:

We too will have standardised packages starting to appear in New Zealand next year, by

passing this bill into law today. They will be stripped of bright colours, and there will be no

glamour. The bill will undoubtedly improve the health of New Zealanders and save lives.

Along with tobacco excise increases and restrictions already in place, this move towards

standardised packaging will help people to quit and prevent others from smoking.183

There was much discussion in the New Zealand Parliament about whether it should have passed

the plain packaging regime in a more timely fashion.184 In response to the media reports about

the WTO Panel decision, New Zealand’s then Trade Minister Todd McClay and Associate

Health Minister Nicky Wagner put out a press release, indicating that the New Zealand

government was confident that Australia would win the WTO case,185 the Health Minister

adding: ‘Smoking is our leading cause of preventable disease and the Government is committed

to the goal of making New Zealand smokefree by 2025’. McClay stressed:

This case is about a country’s right to determine its own measures to protect public health. We

have always said that the link between domestic public health rights and trade is important to

our government and we are fighting hard to ensure this view is shared in the WTO. …. The

WTO has a robust set of trade rules in place to preserve our rights and I remain confident that

the WTO will find in Australia’s favour on tobacco plain packaging.186

180 WTO, Council for TRIPS Meeting, above n 36 [202]. 181 Matthew Rimmer, ‘New Zealand, Plain Packaging, and the Trans-Pacific Partnership’, InfoJustice, 28 March

2014 <http://infojustice.org/archives/32570>. 182 Smoke-free Environments (Tobacco Standardised Packaging) Amendment 2016 (NZ). 183 New Zealand, Parliamentary Debates, ‘Smoke-Free Environments (Tobacco Standardised Packaging)

Amendment Bill: Third Reading’, 8 September 2016 (Peseta Sam Lotu-liga)

<https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20160908_20160908_20>. 184 Ibid; see also Jane Kelsey, ‘Regulatory Chill: Learnings from New Zealand’s Plain Packaging Tobacco Law’

(2017) 17 QUT Law Review 21. 185 New Zealand Government, ‘NZ Confident of Plain Packaging WTO Case’ (Press Release, 6 May 2017)

<http://www.scoop.co.nz/stories/PA1705/S00130/nz-confident-of-plain-packaging-wto-case.htm>. 186 Ibid.



New Zealand has had a keen interest in proceedings because its regime for plain packaging of

tobacco products would come into force on the 14th March 2018. Under new Prime Minister

Jacinda Ardern, the government promises to be even more progressive in terms of its

commitment to public health and tobacco control.

B The United Kingdom

After initially supporting plain packaging, former Prime Minister of the United Kingdom,

David Cameron, postponed the measure, under the pressure of lobbying by the tobacco

industry.187 The government of Scotland threatened to press ahead with its plans to introduce

the plain packaging of tobacco products, if the UK did not.188 Wales was also supportive of the

introduction of plain packaging measures.189 The UK government commissioned Sir Cyril

Chantler to investigate the health impacts of plain packaging. The Public Health Minister Jane

Ellison promised to introduce plain packaging, after receiving the Chantler report. Chantler

advised: ‘Tobacco packages appear to be especially important as a means of communicating

brand imagery in countries like Australia and the UK which have comprehensive bans on

advertising and promotion’.190 After various false starts, the UK Parliament passed the

legislative regime,191 and the introduction of plain packaging of tobacco products has led to a

slump in cigarette sales.192 But the government has had to defend plain packaging in the High

Court of Justice,193 in a case brought by British American Tobacco and others. In the case,

Justice Green also considered the larger international context of the debate over the plain

packaging of tobacco products, and emphasised that the TRIPS Agreement and the FCTC

should be seen as mutually compatible:

It is plain from the above that intellectual property rights are not absolute and must be balanced

against other competing public interests. In particular the right to use a trade mark can, under

national law, yield to limitations imposed in the pursuit of superior public policy

considerations. There is no canonical list of the public interests that may or may not be resorted

to on the part of contracting states to limit intellectual property rights and a good deal of

discretion is accorded to the signatories. What is however clear is that intellectual property

rights can be derogated from in the name of public health since this is one of the few public

interests which is explicitly identified. It is a point I return to later but it is worth emphasising

187 Sarah Boseley and Andrew Sparrow, ‘Delay on Plain Cigarette Pack Decision “Sad Day for Child Health”’,

The Guardian (online), 13 July 2013 <http://www.theguardian.com/society/2013/jul/12/delay-plain-cigarette-

pack-decision-child-health>; Brian Brady, ‘PM’s Election Guru Lynton Crosby Triggers Smoke Alarm’, The

Independent (online), 14 July 2013 <http://www.independent.co.uk/news/uk/politics/pms-election-guru-lynton-

crosby-triggers-smoke-alarm-8707592.html>; Editorial, ‘Cigarette Packaging: A Retreat on Public Health that

Shames No 10’, The Observer, 14 July 2013; Toby Helm and Jamie Doward, ‘David Cameron Told to Sack

Strategy Chief over Link to Tobacco Giants’, The Observer (online), 14 July 2013,

<http://www.theguardian.com/politics/2013/jul/13/david-cameron-lynton-crosby-tobacco>; Jamie Doward,

‘Revealed: Tobacco Giant’s Secret Plans to See Off Plain Cigarette Packets’, The Observer (online), 28 July 2013

<http://www.theguardian.com/business/2013/jul/28/philip-morris-plain-packaging>. 188 The Scottish Government, ‘Tobacco Plain Packaging: Scottish Government to Press Ahead with Plans’ (News,

7 September 2013) <https://news.gov.scot/news/tobacco-plain-packaging>. 189 ‘Cigarette Packaging: Wales Could Go It Alone’, BBC News (online), 12 July 2013,

<http://www.bbc.co.uk/news/uk-wales-23291737>. 190 Susan Boseley, ‘England to Introduce Plain Packaging for Cigarettes’, The Guardian (online), 3 April 2014,

<http://www.theguardian.com/society/2014/apr/03/uk-plain-packaging-cigarettes-smokers>. 191 Tobacco and Related Products Regulations 2016 (UK). 192 Angela Monaghan, ‘New Cigarette Rules Have Led to Slump in Sales, Says Londis Owner’, The Guardian

(online), 14 September 2017, <https://www.theguardian.com/society/2017/sep/14/new-cigarette-rules-slump-

sales-londis-booker?CMP=share_btn_tw>. 193 British American Tobacco Limited and others v The Queen [2016] EWHC 1169 (Admin).




here: For all the above reasons TRIPS and the FCTC can be read together without any risk of

them colliding or being mutually inconsistent.194

The judge comments:

TRIPS makes it abundantly clear that the scope and effect, including usage, of intellectual

property rights may be subject to limitations on grounds of public health; and [Directive

2014/40/EU of the European Parliament and Council, the ‘TPD’] which is an internal market

(shared competence) measure expressly aspires to be compliant with relevant international law

obligations (such as TRIPS). 195

The judge concluded that the regulations are consistent with the TRIPS Agreement. This

decision was upheld on appeal.196 There are certainly global lessons for tobacco control policy

that can be learnt from the tobacco industry’s challenge to the UK’s standardised packaging

legislation.197

C The European Union and Neighbouring Countries

Ireland has adopted the plain packaging of tobacco products.198 The Public Health

(Standardised Packaging of Tobacco) Act 2015 was passed by both Houses of the Oireachtas,

and signed into law by the Irish President on 10th March 2015. Ireland became the first country

in Europe and the second country in the world to pass such legislation.199 Hungary is due to

introduce plain packaging of tobacco products in 2018, and Slovenia will do so in 2020.

Belgium and Finland have taken steps towards the introduction of plain packaging.

A number of neighbouring countries to the European Union have also endorsed Australia’s

position. At the TRIPS Council, Australia received strong support from Norway, whose

government ‘expressed its support for the Australian measures at previous meetings of the

Council and wished to reiterate its view that the TRIPS Agreement 1994 provided Members the

flexibility to adopt measures necessary to protect public health’.200 Norway was confident that

Australia’s plain packaging regime was consistent with international trade law: ‘Following the

information provided by the Australian delegation in this matter, Norway remained confident

that the measures described would be implemented in a manner consistent with Australia’s

WTO obligations’.201 In 2016, Norway introduced a Bill for plain packaging of tobacco

products,202 and in 2017 Norway successfully defended the standardised packaging of these

194 British American Tobacco v The Queen [2016] EWHC 1169 (Admin) [186] 88. 195 Ibid [913] 362. 196 British American Tobacco UK Ltd v Secretary of State for Health [2016] EWCA Civ 1182; Haroon Siddique,

‘Tobacco Firms Fail to Stop UK Introduction of Plain Packaging’, The Guardian (online), 30 November 2016,

<https://www.theguardian.com/society/2016/nov/30/tobacco-firms-uk-introduction-plain-packaging-court-of-

appeal?CMP=share_btn_tw>; ‘Tobacco Giants Lose Appeal Over Plain Packaging’, ITV News, 30 November

2016 <http://www.itv.com/news/2016-11-30/tobacco-giants-appeal-over-plain-packaging-defeated-at-court-of-

appeal/>. 197 Jonathan Griffiths, ‘The Tobacco Industry’s Challenge to the United Kingdom’s Standardised Packaging

Legislation — Global Lessons for Tobacco Control Policy’ (2017) 17 QUT Law Review 66. 198 Jamie Smyth, ‘Ireland Plans to Adopt Plain Packaging of Cigarettes’, The Financial Times, 28 May 2013;

Rimmer, above n 181. 199 Eoin O’Dell, ‘Property and Proportionality: Evaluating Ireland’s Tobacco Packaging Legislation’ (2017) 17

QUT Law Review 46. 200 WTO, ‘Council for TRIPS Meeting’, above n 36, [191]. 201 Ibid [191]. 202 Bill 142L, Amendments to the Tobacco Control Act (implementation of Directive 2014/40/EU and standardised



products in an important legal precedent.203 Switzerland also expressed its support in the TRIPS

Council for public health measures in the area of anti-smoking as long as such measures were

implemented in a manner consistent with the TRIPS Agreement and also the Paris

Convention.204

D The Americas

In WTO Discussions, Canada ‘was confident that Australia, in the elaboration of its Bill, had

taken into account the importance of respecting international obligations’.205 Under the new

government of Justin Trudeau, Canada has pushed forward with its own process into launching

plain packaging of tobacco products.206 Jane Philpott, the Canadian Minister of Health,

commented: ‘I don’t believe tobacco companies should be allowed to build brand loyalty with

children, for a product that could kill them’.207 She emphasised: ‘Research shows that plain

packaging of tobacco products is an effective way to deter people from starting to smoke and

will bolster our efforts to reduce tobacco use in Canada.’208 Rob Cunningham of the Canadian

Cancer Society stated that ‘Plain packaging is a key tobacco control measure to protect youth

and to advance public health …. We strongly support implementation of plain packaging in

Canada, just as so many other countries have done or are in the process of doing.’209 As Dr

Becky Freeman has commented, there is a strong case for Canada to join the tobacco plain

packaging revolution.210

Uruguay has been sympathetic to the position of Australia, especially after its graphic health

warnings were disputed by tobacco companies under investment treaties.211 Providing vocal

support for Australia in the WTO dispute settlement, Uruguay emphasised that it could not

remain silent in this fight against ‘the most serious pandemic confronting humanity’.212

Uruguay also said that ‘the norms of the Multilateral Trading System cannot and should not

force its members to allow that a product that kills its citizens in unacceptable and alarming

proportions continues to be sold wrapped as candy to attract new victims’.213 In the wake of its

defence of graphic health warnings in an Investor–State Dispute Settlement matter,214 Uruguay

tobacco packaging), introduced in Norwegian Parliament, 10 June 2016. 203 Government of Norway, ‘Full Victory to Norway Over Snus Producer Swedish Match’ (Press Release, No

47/2017, 6 November 2017) <https://www.regjeringen.no/en/aktuelt/full-victory-to-norway-over-snus-producer-

swedish-match/id2577797/> and Ruling <http://www.who.int/fctc/implementation/ruling-norway-plain-

packaging.pdf> 204 WTO, ‘Council for TRIPS Meeting’, above n 36, [215]. 205 Ibid [209]. 206 Health Canada, ‘Minister Philpott Launches Public Consultations on Tobacco Plain Packaging: Measures

Would Regulate the Size and Shape of Tobacco Products and Require Standardized Colour and Font’, (News

Release, 31 May 2016, <https://www.canada.ca/en/health-canada/news/2016/05/minister-philpott-launches-

public-consultations-on-tobacco-plain-packaging.html?=undefined&>. 207 Ibid. 208 Ibid. 209 Ibid. 210 Becky Freeman, ‘Making the Case for Canada to Join the Tobacco Plain Packaging Revolution’ (2017) 17 (2)

QUT Law Review 83. 211 Benn McGrady, ‘Implications of Ongoing Trade and Investment Disputes Concerning Tobacco: Philip Morris

v Uruguay’, in Tania Voon et al (eds), Public Health and Plain Packaging of Cigarettes: Legal Issues (Edward

Elgar, 2012), 173–99; and Philip Morris Brands Sàrl v Uruguay, ICSID Case No ARB/10/7, Award (8 July 2016). 212 World Trade Organization, ‘Panels Set Up on Australia’s Tobacco Measures and on US Duties on China’s

Exports’ (News Items, 28 September 2012)

<http://www.wto.org/english/news_e/news12_e/dsb_28sep12_e.htm>. 213 Ibid 214 Philip Morris Brands Sàrl v Uruguay, ICSID Case No ARB/10/7, Award (8 July 2016)




has vowed to introduce plain packaging of tobacco products.215

In the United States, the position of the Obama Administration was complicated on the question

of tobacco control. After introducing graphic health warnings for tobacco products, the

Administration was embroiled in legal action; and eventually dropped the tobacco control

measure for further consideration.216 There has been criticism that the Obama Administration

favoured the tobacco industry in trade negotiations,217 and a lawsuit was launched against the

Food and Drug Administration over the delays in reintroducing graphic health warnings.218

There has been concern that the new Trump administration has strong links to the tobacco

industry, particularly Vice President, Michael Pence, who has received significant funding

from the tobacco industry. 219

E BRICS/BASIC Group

The members of the BRICS and BASIC groupings also offered their perspectives on the debate

over the plain packaging of tobacco products in the TRIPS Council. The representative of

China stressed that members of WTO needed to be cautious and strike a balance between the

protection of IP right holders and the public interest in general.220 China believed that plain

packaging measures should not contravene international obligations under the TRIPS

Agreement.

The representative of Brazil emphasised that the existing international rules on IP should be

supportive of public policy measures designed to protect public health within Members.221

Brazil stressed that Article 8 of the TRIPS Agreement and the Doha Declaration on TRIPS and

Public Health222 should guide the interpretation of the applicable TRIPS provisions on

trademarks. It is worth recalling the actual, broad language of the Doha Declaration. Article 4

affirms that

the Agreement can and should be interpreted and implemented in a manner supportive of WTO

members’ right to protect public health and, in particular, to promote access to medicines for

all. [And] reaffirm[s] the right of WTO members to use, to the full, the provisions in the TRIPS

Agreement, which provide flexibility for this purpose.

215 Tobacco Free Union, ‘Uruguay to Move on Plain Packaging’, 25 May 2017,

<https://twitter.com/TheUnion_TC/status/867713604287463424>. 216 Jennifer Corbett Dooren, ‘FDA Scraps Graphic Cigarette Warnings’, The Wall Street Journal, 19 March 2013. 217 Mike Bloomberg, ‘Why is Obama Caving on Tobacco?’, The New York Times (online), 22 August 2013,

<http://www.nytimes.com/2013/08/23/opinion/why-is-obama-caving-on-tobacco.html>. 218 ‘AAP, Health Groups File Lawsuit Pushing for Graphic Cigarette Warnings’, AAP (online), 4 October 2016,

<http://www.aappublications.org/news/2016/10/04/FDALawsuit100416>; American Academy of Pediatrics and

Others v United States Food and Drug Administration, Complaint (United States District Court for the District

Court of Massachusetts, 8 October 2016)

<http://www.tobaccofreekids.org/content/press_office/2016/2016_10_04_fda_complaint.pdf>. 219 Erin Schumaker, ‘Remember when Mike Pence said Smoking Doesn’t Kill? Pence also Took Money from

Tobacco Companies and fought Tax Hikes on Cigarettes’, The Huffington Post, 29 October 2016,

<http://www.huffingtonpost.com.au/entry/mike-pence-said-smoking-doesnt-

kill_us_58121434e4b064e1b4b0bf93>. 220 WTO, ‘Council for TRIPS Meeting’, above n 36, [212]. 221 Ibid [214]. 222 World Trade Organization, Declaration on the TRIPS Agreement and Public Health, Adopted at Doha on 14

November 2001, WT/Min(01)/DEC/2.



South Africa reserved its position initially,223 noting that the question of plain packaging of

tobacco products involved a tension between public health and a legitimate right to trademark

protection. South Africa has since made further steps itself, towards the adoption of plain

packaging of tobacco products.224 India has shown an interest in the policy option of plain

packaging,225 having already introduced graphic health warnings on tobacco products.226

However, the tobacco industry has been seeking to undermine India’s tobacco control

measures.227 To encourage further legislative and regulatory action, the WHO has promulgated

information for policy-makers on evidence, design, and implementation of plain packaging of

tobacco products.228

VII CONCLUSION

The overarching argument of this article has been that plain packaging of tobacco products is

defensible under the TRIPS Agreement, the TBT Agreement, and GATT, and in light of larger

concerns in respect of international public health law, human rights, and sustainable

development. The article provides a critical examination of the arguments in the WTO dispute

over plain packaging of tobacco products, before the publication of the first ruling in the

dispute. As Alain Pottage has noted,

Plain packaging legislation raises a number of engaging theoretical and practical questions:

about the legal qualities of the intellectual property rights that articulate branding strategies,

about the relationship between the regimes of international trade law and world health policy,

and about the history of regulatory initiatives to address the public health implications of

smoking.229

According to media reports, Australia has prevailed in the WTO dispute.230 The confidential

interim report is said to emphasize that Australia’s laws are a legitimate public health

measure.231 Australia’s plain packaging regime was well designed to withstand legal challenges

under the dispute settlement process of the WTO from Honduras, the Dominican Republic,

Cuba, and Indonesia (and previously, Ukraine). There is a strong body of empirical evidence

supporting the efficacy of plain packaging of tobacco products in Australia. As such, Australia

was in a strong position to win the WTO dispute. The High Court of Australia’s decision on

the plain packaging regime, the decisions on standardised packaging in the UK, and the case

of Société JT International on plain packaging of tobacco products in the State Council of

223 WTO, ‘Council for TRIPS Meeting’, above n 36, [226]. 224 Valene Govender, ‘South Africa Set to Join Global Plain Cigarette Packaging Trend’, News 24, 26 May 2016,

<https://www.news24.com/SouthAfrica/Local/Coastal-Weekly/sa-set-to-join-global-plain-cigarette-packaging-

trend-20160525>. 225 Australia India Institute, Report of the Australia India Institute Taskforce on Tobacco Control: Plain

Packaging of Tobacco Products (2012) ; and Soumyadeep Bhaumik, ‘Private Member’s Bill Proposes Plain

Packaging of Tobacco Products in India’, (2013) 346 British Medical Journal 953. 226 Rhythma Kaul, ‘85% Pictorial Warnings on Tobacco Packs: Government Survey’, Hindustan Times (online),

12 June 2017 <http://www.hindustantimes.com/health/85-pictorial-warnings-on-tobacco-packs-work-govt-

survey/story-qmQt9B3bkfb4HuNH1wEvhJ.html>. 227 Aditya Kalra et al, ‘Marlboro for Every Man: How One Tobacco Giant is Luring Youth to Smoke in India’,

Reuters, 23 July 2017, <https://www.brisbanetimes.com.au/world/marlboro-for-every-man-how-one-tobacco-

giant-is-luring-youth-to-smoke-in-india-20170719-gxeh6x.html>. 228 World Health Organization, Plain Packaging of Tobacco Products: Evidence, Design, and Implementation,

(2016) <http://www.who.int/tobacco/publications/industry/plain-packaging-tobacco-products/en/>. 229 Alain Pottage, ‘No (More) Logo: Plain Packaging and Communicative Agency’, (2013) 47 University of

California Davis Law Review 515, 518–19. 230 Miles and Geller, above n 21; ‘Australia wins’, ABC News, above n 21; Chapman, above n 21. 231 ‘Tobacco Industry Suffers Defeat’, Reuters, above n 73.




France, have provided support for Australia’s stance in the WTO.232 Australia’s adoption of

plain packaging promotes the public interest purposes of the TRIPS Agreement, particularly in

respect of the promotion of public health, human rights, and sustainable development. The

measures are also consistent, in my view, with the TBT Agreement and GATT. Australia’s plain

packaging regime also supports the regime established under the WHO FCTC.

There is no doubt the potential for further appeal by Australia’s opponents. A spokeswoman

for British American Tobacco was of the belief that Australia’s complainants would keep

fighting: ‘As there is a high likelihood of an appeal by some or all of the parties, it’s important

to note that this panel report is not the final word on whether plain packaging is consistent with

international law’.233 However, given the strength of Australia’s position, it is doubtful that the

panel report will be overturned. Nicola Roxon has recommended that the tobacco industry and

its allies should discontinue their opposition to plain packaging of tobacco products:

We had a fight in the High Court, which we won. We had a fight in Hong Kong with Philip

Morris that we won. We’ve had a fight in the WTO. It’s time for them to call it quits. They

can’t keep fighting unless they think that simply by fighting they’ll scare people off.234

Australia’s initiative has already been followed by a number of early adopters around the world.

One can hope the WTO panel decision will encourage other wavering nations to join the plain

packaging revolution. There have also been significant parallel debates in the field of access to

essential medicines, public health, and the intellectual property implications, particularly in

respect of HIV/AIDS, tuberculosis, malaria, cancer, and neglected diseases,235 with a

longstanding debate at the United Nations in forums such as the WHO, the WTO, and the

World Intellectual Property Organization.236 Antony Taubman, diplomat at the WTO, has

commented regarding the ongoing discussions over intellectual property and public health:

‘The debate concerns balancing “access” (getting medicines to those who need them) with

“innovation” (ensuring a sound foundation and the necessary resources for the development of

needed new medicines’.237 The Doha Declaration on Public Health and the TRIPS Agreement

2001 and the WTO General Council Decision 2003 recognises that member states could make

use of flexibilities in the TRIPS Agreement to address public health concerns.238 The United

232 JT International SA v Commonwealth of Australia [2012] HCA 43; British American Tobacco Limited and

others v The Queen [2016] EWHC 1169 (Admin); British American Tobacco UK Ltd & Ors v The Secretary of

State for Health [2016] EWCA Civ 1182; and Société JT International SA, Société d’Exploitation Industrielle des

Tabacs et des Allumettes, Société Philip Morris France SA and Others (State Council of France, CE, 23 December

2016). 233 ‘Tobacco Industry Suffers Defeat’, Reuters, above n 73. 234 Grimm, above n 22. 235 Thomas Pogge, Matthew Rimmer and Kim Rubenstein (eds) Incentives for Global Public Health: Patent Law

and Access to Medicines (Cambridge University Press, 2010); Frederick Abbott, Thomas Cottier, and Francis

Gurry, International Intellectual Property in an Integrated World Economy (Wolters Kluwer Law & Business,

2015); Burcu Kilic, Boosting Pharmaceutical Innovation in the Post-TRIPS Era: Real-Life Lessons for the

Developing World (Edward Elgar, 2014); Joo-Young Lee, A Human Rights Framework for Intellectual Property,

Innovation and Access to Medicines (Ashgate, 2015); and Ellen t’Hoen, Private Patents and Public Health:

Changing Intellectual Property Rules for Access to Medicines (AMB, 2016). 236 Benn McGrady, Trade and Public Health: The WTO, Tobacco, Alcohol, and Diet (Cambridge University Press,

2011); Graeme Dinwoodie and Rochelle Dreyfuss, A Neofederalist Vision of TRIPS: The Resilience of the

International Intellectual Property Regime (Oxford University Press, 2012); Abbott et al, above n 235; and

Obijiofor Aginam, John Harrington, and Peter Yu (ed), The Global Governance of HIV/AIDS: Intellectual

Property and Access to Essential Medicines (Edward Elgar, 2013). 237 Antony Taubman, A Practical Guide to Working with TRIPS (Oxford University Press, 2011), 179. 238 WTO, Declaration on the TRIPS Agreement and Public Health. Adopted at Doha on 14 November 2001,

WT/MIN(01)/DEC/2 ; and Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and



Nations Secretary-General’s High Level Panel on Access to Medicines sought to address the

longstanding tensions between intellectual property, trade, and public health in 2016.239 There

are common concerns in respect of human rights, public health, and sustainable development.

As Nobel Laureate Joseph Stiglitz has observed, there is a need to recognise and respect the

importance of public healthcare, human rights, and sustainable development under intellectual

property, international trade, and investment law.240

It is hoped the epic international trade dispute over plain packaging of tobacco products will

provide future guidance for the proper, harmonious relationship between intellectual property,

public health, and international trade. There does need to be decisive collective international

action to address the global tobacco epidemic.

Public Health, WTO Doc WT/L/540 (2003) (WTO General Council Decision of 30 August 2003). 239 United Nations Secretary-General’s High Level Panel on Access to Medicines, Report of the High Level Panel:

Promoting Innovation and Access to Health Technologies (2016)

<http://static1.squarespace.com/static/562094dee4b0d00c1a3ef761/t/57d9c6ebf5e231b2f02cd3d4/14738900313

20/UNSG+HLP+Report+FINAL+12+Sept+2016.pdf>. 240 Stiglitz, above n 75; Baker et al, above n 76.



TOBACCO-FREE INVESTMENT: HARNESSING

THE POWER OF THE FINANCE INDUSTRY IN

COMPREHENSIVE TOBACCO CONTROL

BRONWYN KING, CLARE PAYNE AND EMILY STONE*

Leveraging the power of the global financial sector is emerging as a powerful, targeted

strategy in tobacco control. The tobacco epidemic has been in decline in many high income

nations since the 1960s but shows few signs of abating in low and middle income nations, with

the tobacco industry offsetting regulatory restrictions and shrinking markets in industrialised

countries by actively promoting tobacco use in poorer countries with weaker tobacco control.

Lung cancer rates and tobacco-related mortality statistics reflect these changes with levels

declining in high income countries but yet to peak in low and middle income countries. This

contrast calls for new approaches that can cross borders, transcend the barriers between

legislative domains and offer a truly international approach. Tobacco Free Portfolios works

collaboratively with the global finance sector to inform, advance and prioritise tobacco-free

investment. This initiative aims to encourage finance leaders to reflect on and reconsider

commercial relationships with the tobacco industry, urging them to be part of the solution

when it comes to addressing one of greatest global challenges of our time.

I INTRODUCTION

The concept of harnessing the power and support of the finance industry is a relatively new

approach to tobacco control and is the focal activity of Tobacco Free Portfolios. Tobacco Free

Portfolios is a young organisation that identified that the global finance sector had largely been

absent from global tobacco control efforts. In 2010, oncologists at the Peter MacCallum Cancer

Centre in Melbourne discovered that some of their superannuation funds were being invested

in tobacco companies. Further investigation revealed that nearly all Australian superannuation

funds invested money in the tobacco industry, primarily via acquisition of international

equities. This remains a common investment strategy of which many superannuation

contributors are likely to be unaware.

Tobacco Free Portfolios engages professionally and discreetly with the finance sector. As the

initiative progressed, the Australian finance industry gradually moved to consider and then

implement tobacco-free investment policies. As at December 2017, there are 41 Australian

superannuation funds with tobacco-free policies that cover all investment options. Those 41

funds have a total of approximately AU$900 billion funds under management, which accounts

for approximately 60 per cent of all Australian Prudential Regulation Authority approved

superannuation funds. In 2015, Tobacco Free Portfolios extended its reach globally and has

now been active in more than a dozen leading economies. To date, a total of approximately

* Bronwyn King: CEO Tobacco Free Portfolios; Honorary Radiation Oncologist, Peter MacCallum Cancer

Centre; Distinguished Fellow University of Melbourne and Kings College London. Clare Payne: Chief of Global

Strategy, Tobacco Free Portfolios; Fellow, The Ethics Centre. Emily Stone: Department of Thoracic Medicine St

Vincent’s Hospital, Kinghorn Cancer Centre, University of NSW.






AU$12 billion of tobacco industry assets has been divested by financial institutions in ten

countries.

Whilst tobacco-free investment is not a new phenomenon, it has not received mainstream

interest until recently. Organisations such as those related to health, with religious affiliations,

and those with ethical screening have long excluded tobacco from portfolio selection as it does

not align with espoused values, and customers and clients have selected such organisations and

financial products based on this investment philosophy. Demonstrating the early inter-

connection of health and finance, MD Financial Management, a financial management

company owned by the Canadian Medical Association, has excluded tobacco since inception,

stating, ‘The decision for the fund to avoid tobacco products, from its inception, showed

leadership on an important social issue that was not yet in the mainstream’.1

Each time a financial institution implements and publicises a tobacco-free investment policy,

the tobacco industry is stigmatised and de-normalisation of the industry increases. Momentum

escalates and new voices — in this case, from the finance sector — contribute to

comprehensive tobacco control. Sceptics of applying financial exclusion policies may cite the

argument that ‘others just buy the stock’. However, the status quo — whereby money is

routinely invested in tobacco companies on behalf of Australian and global workers — needs

to be challenged, even if a direct financial impact on tobacco companies may not be seen until

the movement achieves substantial global scale.

It should be noted that, as tobacco-free investment gains momentum and publicity there are

also other tobacco control initiatives working concurrently to stigmatise the sector and educate

the community. The combined force of such initiatives is already having an impact, seen in the

reduction of tobacco consumption in developed nations where tobacco control is advanced and

the public is educated better than previous generations. Education of the broader community is

an important aspect of tobacco control initiatives. The work of Tobacco Free Portfolios serves

not just to create a narrative of tobacco control, but also to highlight the deceptive and harmful

tactics of the tobacco sector. Financial institutions then repeat this narrative as they discuss

tobacco-free investment internally and make public announcements, thus strengthening

tobacco control messaging and weakening the tobacco sector in the eyes of the broader public.

An understanding of the scale and impact of the tobacco epidemic is crucial for effective

discussions with finance leaders and several key questions routinely arise when financial

organisations are considering the issue. This paper will provide an overview of the tobacco

epidemic and will examine the international treaties and global health data that help provide

answers to these key questions. The complex and entrenched links between the tobacco

industry and the finance sector demand our collective scrutiny. Focusing on informed decision-

making can bridge health and finance and bring together two major but previously independent

forces in tobacco control.

II THE TOBACCO EPIDEMIC

Tobacco use is a global public health issue of profound scale, increasingly seen in economic

and geopolitical terms as well as in the more traditional context where it is considered a purely

1 MD Financial Management <https://mdm.ca/about-md/news-and-events/md-market-updates/md-growth-

investments>.

Tobacco-Free Investment: Harnessing the Power of the Finance Industry in Comprehensive

Tobacco Control


health matter.2 The link between tobacco smoking and lung cancer emerged in the first decades

of the twentieth century.3 However, it was not until the publication of pivotal studies in the

mid-20th century that the association achieved widespread recognition.4 Tobacco has a delayed

effect on health, with peak smoking mortality observed three to four decades after peak

smoking prevalence.5 Lung cancer is now the most common cause of cancer deaths worldwide,

with almost 1.6 million fatalities in 2012,6 predicted to rise to nearly 3 million worldwide by

2035.7 In most regions of the world, lung cancer cases are predicted to increase for the next

few decades, in particular in the Western Pacific region, largely driven by China.8 Globally,

tobacco smoking is currently causing an estimated 7 million deaths per year.9 The major

ailments responsible include cardiovascular disease, chronic obstructive pulmonary disease

and lung cancer.10 In addition to the dire consequences for smokers themselves, World Health

Organization (‘WHO’) data indicate that over 800 000 deaths across the globe result from

second hand smoke exposure.11

Clearly, the tobacco epidemic is having an extraordinary impact on worldwide public health,

first experienced in the industrialised world and now inflicted upon emerging nations. Rigorous

restrictions placed both on the availability of tobacco and on the activity of the tobacco

industry, coupled with education and better smoking cessation services have the potential to

temper the catastrophe. However, this will require vigilance, intensified efforts and new

collaborations.

III TOBACCO AND PENSION FUNDS

Compulsory superannuation has been in place in Australia since 1992. 12 Employers

supplement an employee’s baseline salary by paying an additional 9.5 per cent13 into his or her

2 National Cancer Institute (US) and World Health Organization, ‘The Economics of Tobacco and Tobacco

Control’ (Tobacco Control Monograph 21, National Cancer Institute; NIH Publication No 16-CA-8029A,

National Institutes of Health, 2016). 3 Isaac Adler, Primary Malignant Growths of the Lungs and Bronchi: A Pathological and Clinical Study

(Longmans, Green, 1912) <http://archive.org/details/primarymalignant00adle>; A Ochsner, ‘Tremendous

Increase in Cancer of the Lung: Is Tobacco a Cause?’ (1946) 62(10) Life and Health 6. 4 Ernest L Wynder and Evarts A Graham, ‘Tobacco Smoking as a Possible Etiologic Factor in b\Bronchogenic

Carcinoma: A Study of Six Hundred and Eighty-Four Proved Cases’ (1950) 143 Journal of the American Medical

Association 329. R Doll and A B Hill, ‘Smoking and Carcinoma of the Lung: Preliminary Report, 1950.’ (1999)

77 Bulletin of the World Health Organization 84. 5 Alan D Lopez, Neil E Collishaw and Tapani Piha, ‘A Descriptive Model of the Cigarette Epidemic in Developed

Countries’ (1994) 3 Tobacco Control 242. 6 International Agency for Research on Cancer, Globocan 2012: Estimated Cancer Incidence, Mortality and

Prevalence Worldwide in 2012 <http://globocan.iarc.fr/Default.aspx>. 7 Ibid. 8 Joanna Didkowska et al, ‘Lung Cancer Epidemiology: Contemporary and Future Challenges Worldwide’ (2016)

4(8) Annals of Translational Medicine doi:10.21037/atm.2016.03.11. 9 World Health Organization, ‘Tobacco’ (WHO Fact Sheet, May 2017)

<http://www.who.int/mediacentre/factsheets/fs339/en/>; National Cancer Institute and World Health

Organization, above n 2. 10 Majid Ezzati and Alan D Lopez, ‘Estimates of Global Mortality Attributable to Smoking in 2000’ (2003) 362

The Lancet 847. 11 World Health Organization, above n 9. 12 Australia’s Future Tax System Review, Retirement Income Consultation Paper (2008)

<https://taxreview.treasury.gov.au/content/ConsultationPaper.aspx?doc=html/publications/Papers/Retirement_I

ncome_Consultation_Paper/Appendix_B.htm>. 13 Australian Taxation Office, Super Guarantee Percentage, ATO (12 January 2018)

<https://www.ato.gov.au/Rates/Key-superannuation-rates-and-

thresholds/?anchor=Superguaranteepercentage#Superguaranteepercentage>.



superannuation fund. The money is invested, with a long-term vision of providing financial

security during retirement years. Most Australian pension funds — and indeed the majority of

pension funds around the world — allocate a portion of funds to equities. Many acquire equities

by investing in an index. Indices consist of listed companies in a specific region: for example,

the Standard & Poor 500 (‘S&P 500’) is an index consisting of 500 of the largest listed

companies traded on American stock exchanges;14 the Morgan Stanley Capital International

(‘MSCI’) World Index is a global list.15 When investing in an index, shares of all companies

in the index are purchased. Tobacco companies are usually included in major world indices.

For example, at the time of writing, the Financial Times Stock Exchange 100 (‘FTSE 100’)16

includes two tobacco companies: British American Tobacco, and Imperial Brands. If index

investing is the method used for acquiring shares, tobacco will most likely be included in the

portfolio, even though tobacco shares have not been specifically selected for purchase.

In addition to this incidental exposure to tobacco, active investment occurs when tobacco

company shares are intentionally sought and purchased. Pension funds might be responsible

for active investment decisions or, more commonly, they may outsource such decisions to fund

managers. The extent to which fund managers actively purchase and hold tobacco stocks varies

greatly, with exposure generally ranging from 0–25 per cent of total assets under management.

There may also be some exposure to tobacco companies via corporate bonds, fixed interest and

derivatives. The diversity of financial instruments that can lead to the holding of tobacco stock

demonstrates that tobacco companies tend to be regarded by the finance sector in the same way

that any other product or industry is viewed.

The work undertaken by Tobacco Free Portfolios with dozens of Australian pension funds has

revealed tobacco exposure ranging from 0.108 per cent to 1.28 per cent of total assets. While

this exposure may appear low in percentage terms, the large size of the Australian

superannuation industry — approximately AU$2.3 trillion 17 — means that at least

AU$2.484 billion (and possibly 10 times that amount) of Australians’ money is being invested

in tobacco. This investment in tobacco companies on behalf of Australian workers stands in

sharp contrast to Australia’s global leadership on tobacco control and the dramatic declines in

the number of smokers in Australia in recent decades.

IV THE AUSTRALIAN FINANCE INDUSTRY

Early discussions with finance leaders highlighted a gap between the health and finance sectors

in attitudes to the tobacco industry. Finance leaders were not necessarily thinking about tobacco

companies with the same disdain as the health community. Nevertheless, the presentation of

public health data on smoking, combined with the framing of discussions through a finance

lens, drew attention to the issue. As finance leaders have become more informed about tobacco,

many have examined the role they can play in global tobacco control. In 2012, First State Super

became the first mainstream Australian pension fund to publicly declare that it would

implement a tobacco-free investment policy. By the end of 2017, a total of 41 Australian

pension funds had tobacco exclusions, representing 60 per cent of Australian institutional

investors, divesting a combined total of approximately AU$3.5 billion in tobacco industry

14 S&P Bond Index, S&P Global (2018) <https://www.spglobal.com/our-insights/SP-500-Bond-Index-

Simplifying-the-US-Corporate-Bond-Market.html>. 15 MSCI ACWI Index, MSCI (2018) <https://www.msci.com/acwi>. 16 FTSE UK Index Series, FTSE Russell (2018) <http://www.ftse.com/products/indices/uk>. 17 Superannuation Statistics, Association of Superannuation Funds of Australia (December 2017)

<https://www.superannuation.asn.au/resources/superannuation-statistics>.


Tobacco Control


assets. The momentum continues and has spread beyond the pension sector. In 2016,

Australia’s largest health insurer, Medibank, went tobacco-free. 18 Some banks are re-

examining their lending policies and fund managers are increasingly coming to market with

tobacco-free products to meet the accelerating demand for tobacco-free investment. In 2017,

AMP Capital, one of the largest fund managers in Australia, announced that it was moving to

exclude tobacco across all of its products.19

One of the first international milestones for Tobacco Free Portfolios came from collaboration

with the Paris-based global insurance giant AXA, which adopted a tobacco-free investment

policy in May 2016, resulting in the divestment of €1.8 billion of tobacco industry assets.20 In

2017, BNP Paribas, the world’s seventh largest bank, announced a tobacco-free policy

spanning lending, investment and insurance.21 When OP Trust, a large Canadian pension fund,

announced a move to tobacco-free, it marked the 10th country where the initiative had made

an impact. Tobacco Free Portfolios is currently working with more than 100 financial

organisations in more than a dozen countries, spanning all aspects of the finance system

including pension funds, Sovereign Wealth Funds, fund managers, insurers, banks and rating

agencies. The conversation has become more comprehensive, expanding beyond investment

into commercial relationships more broadly. AXA, for example, has not only ceased investing

in the tobacco industry, but will also run off and not renew corporate insurance covering

tobacco manufacturers’ products, assets and liabilities. Furthermore, no new corporate business

covering tobacco manufacturers will be undertaken.22 Finance leaders frequently lend their

support to the initiative, volunteering strategic advice and opening networks to facilitate greater

engagement and tobacco-free decisions.

One of the most influential aspects of conversations pertaining to tobacco-free investment lies

in alerting finance leaders to the provisions of the World Health Organization Framework

Convention on Tobacco Control (‘FCTC’).23 This is the world’s first legally binding health

treaty. It was crafted in 2004 in response to the tobacco epidemic and has 181 parties.24 WHO

data project 1 billion tobacco-related deaths this century.25 Unfortunately, despite the elevated

standing of the FCTC in the public health sector and its celebration by the health ministries of

most governments, very few in the finance sector are aware of its existence and many do not

know if their own governments are parties to the Treaty. While the focus for implementation

of the FCTC has, justifiably, been placed on prohibiting the sale of cigarettes to minors,

banning tobacco product advertisements and increasing taxes on cigarettes, elements of the

18 ‘Medibank Moves to Tobacco Free Investment Fund’, Media Release, 24 October 2016

<https://www.medibank.com.au/content/about/media-centre/2016/10/medibank-moves-toto.html>. 19 ‘AMP Capital Introduces New Ethical Framework’, Media Release, 16 March 2017

<http://www.ampcapital.com.au/article-detail?alias=/site-assets/articles/media-releases/2017/2017-03/ampc-

introduces-new-ethical-investment-framework>. 20 ‘AXA Group Divests Tobacco Industry Assets’, Press Release, 23 May 2016

<https://www.axa.com/en/newsroom/press-releases/axa-divests-tobacco-industry-assets>. 21 BNP Paribas Australia & New Zealand, ‘BNP Paribas Announces New Measures Regarding the Financing of

Tobacco Companies’, Press Release, 24 November 2017 <http://www.bnpparibas.com.au/en/2017/11/24/bnp-

paribas-announces-new-measures-regarding-the-financing-of-tobacco-companies/>. 22 ‘AXA Group Policy on the Tobacco Industry’ AXA Group, 2016 <https://cdn.axa.com/www-axa-

com%2F306deba3-5cd0-4b3c-aa44-ea27e93399fb_axa_tobacco_policy_2016.pdf>. 23 WHO Framework Convention on Tobacco Control, opened for signature 16 June 2003, 2302 UNTS 166

(entered into force 27 February 2005). 24 WHO Framework Convention on Tobacco Control, Parties to the WHO Framework Convention on Tobacco

Control, FCTC (23 November 2017) <http://www.who.int/fctc/signatories_parties/en/>. 25 WHO Tobacco Free Initiative, WHO Report on the Global Tobacco Epidemic 2013, World Health Organization

(July 2013) <http://www.who.int/tobacco/global_report/2013/en/>.



Treaty as it relates to the finance sector have largely remained unaddressed. In the Guidelines

for implementation, Article 5.3, Provision 4.7 states: ‘Government Institutions and their bodies

should not have any financial interest in the tobacco industry…’. Similarly, Provision 7.2

asserts: ‘Parties that do not have a State-owned tobacco industry should not invest in the

tobacco industry…’. 26 Several European government-controlled financial institutions have

recently adopted tobacco-free investment policies after reviewing the FCTC and considering

the position of their respective organisations in the context of society more broadly. There are

hundreds more finance organisations in which the same discussions — discourse that serves to

shine a spotlight on the FCTC — would likely be equally influential.

In addition to the FCTC, the United Nations Sustainable Development Goals (‘SDGs’)27 have

provided a valuable, constructive platform on which to base dialogue regarding tobacco-free

investment. The SDGs are a set of 17 global goals with targets. Formally adopted by the UN

General Assembly in September 2015, they officially came into force on 1 January 2016. While

it is easy to appreciate the importance of tobacco control in pursuit of SDG 3, ‘Good Health

and Well-Being’, some may not be aware that dramatic improvements in comprehensive

tobacco control are in fact vital for achievement of 13 of the 17 SDGs.28 For example, SDG 1

calls for ‘No Poverty’. However, money spent on tobacco often accounts for an alarming

percentage of household income. In Thailand, 13.6 per cent of the household income of low

income families is spent on tobacco, displacing money that could be used to pay for food,

clothing and education.29 SDG 2 focuses on ‘Zero Hunger’, but for example in Kenya and

Bangladesh, tobacco cultivation has replaced food crops and has led to local food insecurity.30

SDG 17 calls for ‘Partnerships for the Goals’, which most clearly articulates the importance of

cross-sector collaboration when addressing major global issues and is the underlying

philosophy of the work of Tobacco Free Portfolios.

There are several other United Nations instruments and agencies that provide impetus and

rationale to consider the issue of tobacco, including the United Nations Guiding Principles for

Business and Human Rights, the United Nations Global Compact (which expelled tobacco

companies from their membership in 2017),31 the United Nations Environment Programme

Finance Initiative, the UN-backed Principles for Responsible Investment (‘PRI’) and Principles

for Sustainable Insurance. In association with the PRI, the world’s first ‘Investor Statement on

Tobacco’ was launched in May 2017, and in just three weeks, received 54 signatories with

combined assets under management of US$4 trillion.32

26 WHO Framework Convention on Tobacco Control, Guidelines for Implementation of the WHO FCTC (2013)

<http://www.who.int/fctc/guidelines/adopted/guidel_2011/en/>. 27 United Nations Sustainable Development Goals: 17 Goals to Transform Our World (2016)

<http://www.un.org/sustainabledevelopment/>. 28 Framework Convention Alliance, How to Take ‘FCTC Implementation’ from the Sustainable Development

Goals (SDGs) and Translate it into Action In-country: An Advocacy Toolkit (2015)

<www.fctc.org/images/stories/SDGs_ToolkitFINAL.pdf>; Unfair Tobacco, Every Tobacco Is Unfair Tobacco,

Unfairtobacco.Org <https://www.unfairtobacco.org/en/>. 29 Southeast Asia Tobacco Control Alliance, Status of Tobacco Use and Its Control: Thailand Report Card (2008)

<http://seatca.org/dmdocuments/Thailand%20Report%20Card%202008.pdf>. 30 Wardie Leppan, Natacha Lecours and Daniel Buckles, Tobacco Control and Tobacco Farming: Separating

Myth from Reality (Anthem Press, International Development Research Centre, 2014)

<https://www.idrc.ca/en/book/tobacco-control-and-tobacco-farming-separating-myth-reality>. 31 United Nations Global Compact, Who Should Join?

<https://www.unglobalcompact.org/participation/join/who-should-join>. 32 UN Principles for Responsible Investment, Investor Statement in Support of World No Tobacco Day (2017)

<https://www.unpri.org/download_report/30847>. See also: ‘Global Investors Support Government Action on


Tobacco Control


V FIVE KEY CONCERNS OF THE FINANCE INDUSTRY WHEN DISCUSSING TOBACCO-FREE

INVESTMENT

Introducing the topic of tobacco-free investment to finance leaders generally gives rise to

common concerns and beliefs that may initially be seen as potential barriers to action. Five

such concerns are addressed here.

1. Shouldn’t adults be able to use and enjoy a legal product?

For adults the consumption of tobacco remains legal. The issue, however, is that informed

adults rarely choose to start smoking. Most smokers commence the habit as children, with the

average age of onset between 11 and 15 in the United States. Over 80 000 children begin

smoking every day, and half of them live in Asia.33 To argue that these children — essentially

the world’s poorest and most vulnerable — are fully informed about the serious long-term

health consequences is simply implausible. There are many examples of tobacco companies

intentionally targeting children in their advertising. In 2012, Phillip Morris was forced to

remove billboards in Germany as the courts determined that the marketing campaign aimed to

lure teenagers.34 There are further examples of cigarette sale points being deliberately placed

close to schools.35 Cultural themes such as sport, movies and fashion have been exploited by

the tobacco industry to successfully target the young and impressionable in Asian countries.36

It is important to note that cigarettes have been modified over time to become more addictive

through higher nicotine yield.37 In countries with advanced tobacco control policies, many

adult smokers are indeed reluctant smokers. A survey of smokers in Canada, the United States,

the United Kingdom and Australia revealed that approximately 90 per cent agreed when

presented with the statement, ‘If you had to do it over again, you would not have started

smoking’.38 Smoking cessation might be seen as the simple answer, but quitting is difficult,

usually requiring multiple attempts and a number of approaches incorporating

pharmacotherapy and cognitive behavioural therapy.39 Moreover, vulnerable groups such as

the homeless, mentally ill, incarcerated, indigenous people, or at-risk youth face particular

Tobacco Control’ (Press Release, 31 May 2017), <https://www.unpri.org/press-releases/global-investors-support-

government-action-on-tobacco-control>. 33 World Health Organization, Regional Office for the Western Pacific, ‘Smoking Statistics’ (Fact Sheet, WPRO,

27 May 2002) <http://www.wpro.who.int/mediacentre/factsheets/fs_20020528/en/>. 34 Alianca de Controle do Tabagismo Brazil et al, You’re the Target: New Global Marlboro Campaign Found to

Target Teens (Campaign for Tobacco-Free Kids, 2014) <https://www.global.tobaccofreekids.org/what-we-

do/industry-watch/ stop-marlboro>. 35 Michael O Chaiton et al, ‘Tobacco Retail Outlets and Vulnerable Populations in Ontario, Canada’ (2013) 10

International Journal of Environmental Research and Public Health 7299; Cheryl Bettigole and Thomas A

Farley, ‘Retail Stores and the Fight Against Tobacco: Following the Money’ (2016) 176 JAMA Internal Medicine

1520. 36 J Knight and S Chapman, ‘“Asian Yuppies...Are Always Looking for Something New and Different”: Creating

a Tobacco Culture among Young Asians’ (2004) 13(Suppl 2) Tobacco Control ii22. 37 Thomas Land et al, ‘Recent Increases in Efficiency in Cigarette Nicotine Delivery: Implications for Tobacco

Control’ (2014) 16 Nicotine & Tobacco Research: Official Journal of the Society for Research on Nicotine and

Tobacco 753. 38 J Cooper, R Borland R and HH Yong, ‘Australian Smokers Increasingly Use Help to Quit, but Number of

Attempts Remains Stable: Findings from the International Tobacco Control Study 2002–09’ (2011) 35 Australian

and New Zealand Journal of Public Health 368. 39 Tobacco Use and Dependence Guideline Panel (US), Treating Tobacco Use and Dependence: 2008 Update

(US Department of Health and Human Services, 2008) <https://www.ncbi.nlm.nih.gov/books/NBK63952/>.



barriers to smoking cessation, including stress, competing needs, poor motivation and ready

access to tobacco.40

2. Shouldn’t we engage with the tobacco industry to change their behaviour?

Engagement with companies by their shareholders is now a common strategy within the

finance sector, to try to create change, especially when the company’s activities are

questionable or have known negative impacts. There are many examples of effective

engagement of this nature, across a broad range of industries, however, tobacco companies

present an exception to useful engagement. In July 2017, Dr Vera da Costa e Silva, the Head

of the WHO’s FCTC Secretariat stated ‘Engagement with the tobacco industry is contrary to

the United Nations system’s objectives, fundamental principles and values’.41 In recognition

of both the futility of collaborating with the tobacco industry and the inherent conflict of

interest, the WHO issued a directive stating, ‘The tobacco industry cannot be an effective

partner in tobacco control’.42 These views on the futility of engagement with the tobacco

industry are not well appreciated outside the health sector.

3. If we go tobacco-free, won’t we just open ourselves to never-ending requests to exclude

other products and industries sending us down a ‘slippery slope’.

There are many industries and products that might be regarded as controversial, sensitive,

unethical, immoral or undesirable. A concern of finance leaders is that taking a strong position

on tobacco will, over time, lead to an endless expectation that other companies or industries

should be excluded from investment portfolios. It is important to acknowledge that applying

exclusions to investment policies is something that should only be considered in the most

exceptional circumstances. Tobacco is often viewed as the quintessential example. A

framework of three questions provides the rationale:

(1) Can the product that the company makes be used safely?

With respect to tobacco companies, the answer is an unequivocal ‘no’. The only safe

number of cigarettes for human consumption is zero. Even smoking an average of less

than one cigarette per day increases the risk of death from lung cancer nine-fold

compared to non-smokers.43 When used precisely as intended, tobacco will result in the

early death of two out of three smokers.44 The evidence demonstrating the categorical

and unconditional danger of smoking tobacco is irrefutable.

(2) Is there a UN Treaty regarding the issue?

40 Laura Twyman et al, ‘Perceived Barriers to Smoking Cessation in Selected Vulnerable Groups: A Systematic

Review of the Qualitative and Quantitative Literature’ (2014) 4(12) BMJ Open <https://www-ncbi-nlm-nih-

gov.wwwproxy1.library.unsw.edu.au/pmc/articles/PMC4275698/>. 41 Vera da Costa e Silva, ‘Engagement with Tobacco Industry Conflicting with UN Principles and Values’ (WHO

FCTC Secretariat Statements, 11 July 2017) <http://www.who.int/fctc/secretariat/head/statements/2017/ungc-

integrity-review-tobacco-industry/en/>. 42 WHO Tobacco Free Initiative, Tobacco Industry Interference with Tobacco Control (WHO, 2008)

<http://www.who.int/tobacco/resources/publications/Tobacco%20Industry%20Interference-FINAL.pdf>. 43 Maki Inoue-Choi et al, ‘Association of Long-term, Low-intensity Smoking With All-cause and Cause-specific

Mortality in the National Institutes of Health–AARP Diet and Health Study’ (2017) 177 JAMA Internal Medicine

87. 44 Emily Banks et al, ‘Tobacco Smoking and All-cause Mortality in a Large Australian Cohort Study: Findings

from a Mature Epidemic with Current Low Smoking Prevalence’ (2015) 13 BMC Medicine 38.


Tobacco Control


For tobacco, the answer is ‘yes’. There is indeed a UN tobacco treaty, the WHO FCTC.

As previously noted, the WHO has estimated that there will likely be 1 billion tobacco-

related deaths this century.45

(3) Can investors use engagement with the company as an effective tool to create change?

As it pertains to tobacco companies, the answer is ‘no’.

When these questions and answers are considered collectively, a clear framework emerges. As

such, applying an exclusion to investment in tobacco companies can be viewed as both rational

and pragmatic.

4. We can only examine financial issues. We cannot take moral or ethical considerations

into account.

Some executives and trustees remain exclusively focused on framing investment decision-

making around financial metrics. This positioning tends to be justified on the basis of fiduciary

duties. Trustees of superannuation funds and other financial service providers are subject to

statutory obligations to act in the best interests of their clients. The term ‘best interests’ is one

of continuing inquiry within the sector, with a growing belief that it implies the pursuit of more

than a purely financial benefit. According to lawyer Michelle Levy, a Partner at Allens, ‘What

really does matter is that the best interests duty is not interpreted as a duty to obtain the best

outcome’.46 In 2014, the UK Law Commission Report offered further clarification on fiduciary

duties when it concluded, ‘the law is sufficiently flexible to allow other, subordinate concerns

to be taken into account…provided that: they have good reason to think that scheme members

share the concern; and there is no risk of significant financial detriment to the fund’.47 In 2016,

a report on fiduciary duties was released by the PRI48 in conjunction with the United Nations

Environment Programme Inquiry into the Design of a Sustainable Financial System. Fiona

Reynolds , the Managing Director of PRI stated:

Recent studies have broadened the interpretation of fiduciary duty away from the narrow

confines of past definitions, and have emphasised that there is no conflict between fiduciary

duty and ESG [Environmental, Social, Governance] considerations — there is a growing

recognition that ESG issues are in fact financially material to a portfolio. Using the status quo

as a reason for not integrating ESG is no longer acceptable.49

The growing tobacco-free investment movement has seen hundreds of trustees and directors

exercise their decision-making to exclude tobacco investment explicitly while abiding by their

fiduciary obligations. The decision of such finance leaders to embrace tobacco-free investment

has yet to be formally challenged in terms of fiduciary duty. However, it is evident that some

trustees and directors remain cautious in their decision-making, conducting predictive financial

modelling in addition to investigating and verifying ethical considerations and risks. However,

taking a long-term view, analysis of the prospective risks faced by the tobacco industry

45 WHO Tobacco Free Initiative, above n 25. 46 Michelle Levy, Allens Linklaters, ‘The Best Interests Duties — Process or Outcome’, Unravelled (5 February

2015) <http://www.allens.com.au/pubs/fsr/150205-unravelled-02.htm> 47 Law Commission (UK), Fiduciary Duties of Investment Intermediaries, Report, Law Com No 350 (2014)

<http://www.lawcom.gov.uk/project/fiduciary-duties-of-investment-intermediaries/> 48 Principles for Responsible Investment, UNEP Finance Initiative and the United Nations Global Compact

Fiduciary Duty in the 21st Century, (PRI, 2015) <https://www.unpri.org/download_report/6131>. 49 Quoted in ‘New Report Aims to End Debate about ESG and Fiduciary Duty’ (PRI Press Release, 7 September

2015) <https://www.unpri.org/page/new-report-aims-to-end-debate-about-esg-and-fiduciary-duty>.



suggests that avoiding tobacco stocks may be considered a prudent financial decision. There

are four main risks to the long-term future of the tobacco industry:

(1) The risk of a changing regulatory environment that will reduce tobacco consumption:

181 parties to the WHO FCTC have committed to the implementation of comprehensive

and robust regulatory changes. In May 2016 alone, over 30 countries adopted significant

additional tobacco control measures. These include the entire European Union, the

United States and Australia.50

(2) Litigation risk: legal action has long overshadowed the tobacco industry. Although it

might seem that the industry can survive ad hoc and even occasionally large settlements,

class actions continue. In June 2015, a Canadian court ordered three tobacco companies

to pay C$15.5 billion (£8 billion), the largest award for damages in the country’s

history. The plaintiffs were Quebec smokers who argued that the companies did not

warn their customers properly of the inherent dangers of cigarettes and thereby failed

in their general duty to not cause injury to another person.51 The case is currently on

appeal. However, if upheld, a precedent will have been set for other Canadian

jurisdictions, for other Commonwealth countries and for the world in general. The

business model of the tobacco industry, one that externalises an estimated $1 trillion in

costs each year52 — costs borne by governments across the world — yet internalises

profits, is being challenged.

(3) Supply chain risk: scrutiny of supply chains is a major threat for the tobacco industry.

Analysis of supply chains has revealed a disturbing reality, with the International

Labour Office issuing a report in March 2017 stating that ‘in tobacco growing

communities, child labor is rampant’.53 The US Department of Labor currently lists 15

countries that use child labour in tobacco farming.54 Reports from 2014, 2015 and 2016

detail child labour practices on tobacco farms in the United States itself.55 In many

cases, children work without the required protective equipment, putting them at risk of

50 Matthew Thomas, ‘Tobacco Excise Increase: Budget Review 2016–17 Index’ (Research Paper Series 2015–16,

Parliamentary Library, 4 May 2016)

<http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/Budget

Review201617/Tobacco>; Tom Brooks-Pollock, ‘Menthol Cigarettes Banned by EU under Stringent New

Tobacco Laws’, The Independent (online) 19 May 2016 <http://www.independent.co.uk/news/uk/home-

news/the-eu-is-banning-menthol-cigarettes-a7037346.html>; US Food and Drug Administration, ‘FDA Takes

Significant Steps to Protect Americans from Dangers of Tobacco Through New Regulation’ (FDA News Release,

5 May 2016) <http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm499234.htm>. 51 Letourneau v JTI-MacDonald Corp, Imperial Tobacco Canada Limited, and Rothmans Benson & Hedges Inc

2015 QCCS 2382 (Superior Court Province of Québec, Riordan JSC, 9 June 2015) <http://tjl.quebec/wp-

content/uploads/2015/05/2015-06-09-AA-Jmt20150609CORRECTED.pdf >; BBC, ‘Tobacco Firms to Pay

Billions in Damages in Canada’, BBC News (online), 2 June 2015, <http://www.bbc.com/news/world-us-canada-

32969338>. 52 National Cancer Institute and World Health Organization, above n 2. 53 International Labour Office, Fundamental Principles and Rights at Work Branch, ILO Cooperation with the

Tobacco Industry in the Pursuit of the Organization’s Social Mandate, ILO Governing Body, 329th session,

Agenda item 6, GB329/POL/6 (28 February 2017) <http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---

relconf/documents/meetingdocument/wcms_545944.pdf>. 54 Bureau of International Labor Affairs, List of Goods Produced by Child Labor or Forced Labor (30 September

2016) US Department of Labor <https://www.dol.gov/ilab/reports/child-labor/list-of-goods/>. 55 Ibid; ASH: Action on Smoking & Health, Tobacco’s Hidden Children: Hazardous Child Labor in United States

Tobacco Farming (2014) <http://ash.org/tobaccos-hidden-children/>; Human Rights Watch, Teens of the

Tobacco Fields: Child Labor in United States Tobacco Farming (9 December 2015)

<https://www.hrw.org/report/2015/12/09/teens-tobacco-fields/child-labor-united-states-tobacco-farming>.


Tobacco Control


Green Tobacco Sickness, an illness caused by absorbing nicotine through the skin.56

Such abuse of human rights appears unlikely to continue unchecked in a world that

increasingly demands improved transparency, responsibility and sustainability. The

employment only of adults, under fair and safe work conditions would require dramatic

systemic change in the industry and escalate costs immeasurably.

(4) Reputation risk: increased potential for damage to reputation by association also

threatens the long-term future of the tobacco industry. Two aspects must be considered.

The first is the risk of an association with the tobacco industry. The Reputation Institute

compiled a report in 2010, based on 80 000 consumer interviews in 32 countries in

which tobacco was listed as the world’s least reputable industry. Professor Mike Daube,

then President of the Australian Council on Smoking and Health, said in relation to that

report: ‘The public around the world rate this lethal industry exactly where it belongs

— at rock bottom. The tobacco industry richly deserves its place as the world’s most

disreputable industry.’57 Dr Margaret Chan, Director General of the WHO, declared

during her opening speech at the Conference of the Parties of the FCTC in 2010: ‘The

tobacco industry has vast financial resources, lawyers, lobbyists, and no values

whatsoever beyond the profit motive’.58 The second aspect for consideration is the risk

of failing to take part in the global shift away from tobacco companies, demonstrated

by notable financial institutions in 10 countries, in the past two years alone, including:

AXA; AP4, one of Sweden’s most influential pension funds; Fonds de Reserve pour les

Retraites, the largest French pension fund; CalPERS, the largest pension fund in the

United States; the Irish Sovereign Wealth Fund; multiple Dutch pension funds; Bank of

New Zealand; OP Trust, a large Canadian pension fund; BNP Paribas, a leading global

bank; and the majority of the Australian pension fund industry.

5. The tobacco industry performs well in ‘sustainability’ ratings so why would we address

this issue?

The recognition of Environmental, Social, and Governance (‘ESG’) considerations has

continued to gain support and acceptance within the finance sector. Many funds have staff

dedicated to ESG analysis. Increasing recognition of the broad community impacts of the

deployment of capital has encouraged financial organisations to look beyond traditional

metrics when analysing companies in which they may or may not choose to invest. However,

there is a paradox. On many occasions, despite the sense of advancement resulting from the

incorporation of ESG considerations into investment decision-making, the pure application of

ESG principles to the issue of investment in tobacco companies has proven to be a hindrance.

To determine which companies perform best according to ESG criteria, rating systems have

evolved and rankings and awards are regularly issued and distributed. In the most incongruous

circumstances, some methodologies currently employed by mainstream rating agencies

perversely propel tobacco companies to the top ranks of classification systems that were

designed to showcase good corporate behaviour. How does this happen? The following

examples illustrate this irony.

56 ASH: Action on Smoking & Health, above n 55. 57 Quoted in: Australian Health News Research Collaboration University of Sydney School of Public Health,

‘Tobacco Industry is the World’s Least Reputable Industry’ (Media Release, 17 June 2010) <http://www.tobacco-

facts.net/2010/06/tobacco-industry-is-the-world-least-reputable-industry>. 58 Margaret Chan, ‘Address by Director-General of WHO’, Conference of the Parties to the WHO Framework

Convention on Tobacco Control, 4th session, Agenda item 1, FCTC/COP/4/DIV/3 (18 November 2010)

<http://apps.who.int/gb/fctc/PDF/cop4/FCTC_COP4_DIV3-en.pdf>.



The Dow Jones Sustainability Index (‘DJSI’) is designed to highlight companies with superior

sustainability metrics. Like many rating systems, it employs a ‘best of sector’ strategy. This

sees tobacco companies exclusively compared to other tobacco companies. While the overall

or absolute ESG scores for all tobacco companies may be poor, the one with the least deficient

grade is included in the DJSI. In September 2016, Reynolds American Inc issued a press release

stating, …the company has been recognised again as a leader in corporate sustainability by being

awarded membership in the 2016–2017 Dow Jones Sustainability North America Index,

effective Sept. 8, 2016. This is the third consecutive year, and eighth out of the last nine years,

that RAI has been recognised as a leader in corporate sustainability efforts. In addition, this is

the first year that RAI has attained the DJSI World designation for the top-performing tobacco

company worldwide.59

The website for British American Tobacco states: ‘We were the first company to be included

in the Dow Jones Sustainability Index and we’ve been included every year since’.60 With

tobacco companies now severely restricted in relation to advertising and product promotion,

their inclusion in globally recognised indices provides a positive promotional opportunity.

Global ratings agencies, considered experts in research and evaluation of listed companies,

regularly award tobacco companies such as British American Tobacco (Malaysia) the

maximum ratings (either green dots, stars, or As) for categories measuring social impact, such

as ‘Supply Chain Labor Standards’ and ‘Product Safety and Quality’. Under this system,

overall ESG Ratings for tobacco companies can be ‘AA’ — that such outcomes can be

explained by ‘best of sector’ ratings, regardless of absolute scores, demands urgent revision.

In another example, the Good Governance Report published by the Institute of Directors in the

UK in September 2016 61 focused on five key attributes: board effectiveness, audit

accountability, remuneration, relations with shareholders, and relations with other

stakeholders. The number one ranking was awarded to British American Tobacco.62 This begs

the question: why are the governance metrics of a company lauded when the company

manufactures a product that kills two thirds of its customers?63 That both mortality rate and

societal impact of the product are not captured by such ranking methodologies must be

challenged. It is evident that in their current form, ratings systems can obscure the truth,

misleading investors and diverting attention from the most crucial detail, one which demands

our urgent and collective examination, namely, the impact of the company’s primary business.

To sideline 7 million annual deaths in any system of corporate analysis is an extraordinary

oversight, which, understandably, is having adverse consequences.

Rankings exert considerable influence on the finance sector and investment community. When

investors and potential investors are presented regularly with such outstanding score sheets,

finance leaders might very reasonably hesitate to even consider the issue of the real cost of

59 Reynolds American Inc, ‘RAI Selected to Dow Jones Sustainability North America Index for 8th Time’, (Press

Release No RAI 2016–24, 8 September 2016) <http://s2.q4cdn.com/129460998/files/doc_news/2016/2016-24-

Press-Release-RAI-selected-to-DJSI.pdf>. 60 British American Tobacco, A Sustainable Approach: Investing in a Sustainable Future (2017)

<http://bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO9DCFJG>. 61 Institute of Directors (UK), The 2016 Good Governance Report: The Great Governance Debate Continued

(2016)

<https://www.iod.com/Portals/0/PDFs/Campaigns%20and%20Reports/Corporate%20Governance/The%202016

%20Good%20Governance%20Report.pdf?ver=2016-09-07-102637-003>. 62 Ibid. 63 Banks et al, above n 44.


Tobacco Control


tobacco. The problem lies in rating system methodologies. ‘Best of sector’ is not an appropriate

way to measure tobacco companies. All tobacco companies make products that cause death. A

blanket exclusion of the industry from rating systems may be required. In 2017, Vigeo Eiris, a

ratings agency based in France and the UK, downgraded the scores of all tobacco companies

and as a consequence, tobacco companies are no longer eligible for inclusion in Vigeo Eiris’s

‘best of class’ listings.64 This change is a very welcome development and may prompt other

ratings agencies to revise their methodologies.

VI SUMMARY AND CONCLUSIONS

The deep and complex links between the global finance sector and the tobacco industry were

established long before the true impact of tobacco on human health was understood. These

links have gone largely unnoticed, unexamined and unchallenged. If the finance system were

to be created from scratch today, it is hard to imagine that tobacco companies would escape

our scrutiny, would be deemed to be worthy of the same treatment as other companies, and slip

their way into our investment portfolios by matter of routine. We need only consider the

changed attitudes to slavery to understand how far society can move. Social attitudes and

cultural acceptances can shift, as can legislation and regulation. Tobacco should be considered

in a new light that of our new technological age where the impact of tobacco across health,

government, the environment and human rights can be both tracked and measured. What would

we do if tobacco companies asked to be listed on the newly formed stock exchanges of the

world, to be included in global indices, to be part of standard benchmarks against which

financial returns are measured? What would we say if banks were to lend tobacco companies

money, if pension funds were to invest in them and insurers were to insure their deadly cargo

lest it be spoiled or damaged on route to intended customers? Current thinking would not

tolerate an industry whose products are responsible for 7 million deaths per year, an industry

in which growing and manufacturing are interlaced with unacceptable working conditions

including child labour, an industry that was built on a business model where costs are

externalised but profits internalised. Indeed, we need to acknowledge this shift in thinking and

standards and act on it.

Forging strong networks in the finance sector is vital to comprehensive tobacco control and

has, until now, been a missing piece to the puzzle. The world’s health community is committed

to tobacco control, as are 181 state parties to the FCTC. The sobering reality, though, is that

such efforts are not enough, with an estimated eight million deaths projected for the year

2030.65 If the global finance sector continues to invest in, and seeks to profit from the tobacco

industry, major sectors of society will continue to work against each other, forgoing a crucial

opportunity to address the tobacco epidemic collaboratively. Clinicians can play a major role

in bridging the gap between the health and finance sectors. Recounting real life examples of

the extraordinary suffering inflicted by tobacco may seem like a simple task to doctors, yet the

power of these shared stories is enormous, especially when delivered in the boardrooms of the

world’s largest financial institutions.

64 Vigeo Eiris, ‘Vigeo Eiris Downgrades the Scores of Tobacco Sector Companies’ (Press Release, 23 May 2017)

<http://www.vigeo-eiris.com/vigeo-eiris-downgrades-the-scores-of-tobacco-sector-companies/>. 65 National Cancer Institute and World Health Organization, above n 2.



In 1964, the US Surgeon General made the first public announcement acknowledging the

unequivocal relationship between smoking and serious disease and death. 66 As a global

community, we have known for more than 50 years that tobacco is not merely another product

and that tobacco companies are not just ordinary companies. A different approach is now

required to address every facet of their existence. The health sector treats the tobacco industry

differently. Governments, too, treat the tobacco industry differently. It is heartening to see

another sector of the global community — the finance sector — join collective efforts to

confront one of the most extraordinary problems of our era. Disentangling the finance sector

from tobacco will take some time, but the unravelling has already begun. A tobacco-free future

depends on it.

66 United States Surgeon General’s Advisory Committee on Smoking and Health, Smoking and Health (Public

Health Service Publication No 1103, US Public Health Service, Office of the Surgeon General, 1964)

<http://profiles.nlm.nih.gov/NN/B/B/M/Q/>.

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