Philip Morris Asia Limited (PMA), Hong Kong, the owner of the Australian affiliate, Philip Morris Limited (PML), today announced that it has served a notice of claim on the Australian Government, stating its intention to pursue legal action over plans to introduce plain packaging in Australia for tobacco products. PMA says it is taking action under Australia’s Bilateral Investment Treaty with Hong Kong.

PMA has also warned that damages caused by plain packaging – due to be implemented in Australia from January 2012 – may amount to billions of Australian dollars. “The forced removal of trade marks and other valuable intellectual property is a clear violation of the terms of the bilateral investment treaty between Australia and Hong Kong. 

“We believe we have a very strong legal case and will be seeking significant financial compensation for the damage to our business,” said Anne Edwards, spokesperson for PMA.

“Legal action is not a course we take lightly, but the government has unfortunately left us with no other option,” continued Edwards. “The government has consistently ignored the concerns expressed by a broad range of domestic and international stakeholders about the adverse consequences of plain packaging and has failed to demonstrate that the policy will stop people from smoking.”

PML has a long history in Australia, manufacturing and selling cigarettes since 1954. Over this time it has built well-known brands such as Marlboro, Alpine, Longbeach, Peter Jackson, choice and GT. 

BRAND DIFFERENTIATION
The company claims that ‘plain packaging robs PML of its ability to use these brands to differentiate from competitor brands, effectively turning tobacco products into a commodity’. 

Law professor at Georgetown University Law Center, Don Wallace Jr., and Chairman of the International Law Institute and an expert on investor-state disputes, said: “Plain packaging legislation would expose Australia to well-founded claims under the treaty, potentially costing the Australian Government billions of dollars in damages.”

The notice served on the Australian government by PMA begins a mandatory period of three months during which the parties must attempt to negotiate a satisfactory outcome. If this is not achieved, PMA will then proceed to the next step of arbitration proceedings pursuant to the Arbitration Rules of the United Nations Commission on International Trade Law 2010. 

Philip Morris International Inc. (PMI) is the world’s leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in approximately 180 countries. 

In 2010, the company held an estimated 16.0% share of the total international cigarette market outside of the US, or 27.6%, excluding the People’s Republic of China and the US.