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Home \Litigation \Litigation by Country \Australia \  Philip Morris Asia Limited v. Commonwealth of Australia (Procedural Order No.8)

Philip Morris Asia Limited v. Commonwealth of Australia (Procedural Order No.8)

Philip Morris Asia (PMA) commenced arbitral proceedings against Australia in relation to Australia's Tobacco Plain Packaging Act and associated regulations, pursuant to the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (the Treaty). An ad hoc Tribunal has been established to adjudicate the dispute, with its registry in the Permanent Court of Arbitration. For background on the case and earlier Procedural Orders, see related case: Philip Morris Asia Limited v. Commonwealth of Australia (Procedural Order No.4).

In this decision, the Tribunal ruled on Australia's request to have the proceedings bifurcated between arguments on jurisdiction and arguments on the merits. PMA objected to the hearing being bifurcated, primarily on the grounds that the issues to be decided significantly overlap and that Australia's jurisdictional arguments are not substantial.

Australia alleges that the Tribunal has no jurisdiction to hear the dispute on 3 grounds, as follows.

1) First, Australia alleges that PMA's "investment" in Australia was not admitted in accordance with the Treaty because PMA's Statutory Notice under Australia's foreign investment rules contained false and misleading assertions as to the purpose of the investment. Australia alleges that PMA's true purpose, which should have been stated on the Statutory Notice, was to place itself in a position where it could bring this claim under the Treaty.

2) Secondly, Australia alleges that PMA's claim falls outside the Treaty because it relates to a pre-existing dispute; or, alternatively, that it amounts to an abuse of right because PMA re-structured its investments with the express purpose of bringing this claim, after the Australian Government had announced its intention to implement plain packaging.

3) Thirdly, Australia alleges that PMA's assets - being only its shares in PML and PM Australia - do not constitute "investments" under the Treaty because PML and PM Australia's investments do not themselves enjoy the protections of the Treaty (not being investments in Hong Kong).

In this Order, the Tribunal ruled that Australia's first and second jurisdictional arguments should be bifurcated and heard first, but that the third argument should be joined with the merits of the dispute. The Tribunal reasoned that if Australia wins on either of the first or second arguments, it would dispose of the entire proceeding, whereas Australia winning the third argument would not be dispositive.

The Tribunal subsequently set down the hearing on jurisdiction for February 16, 2015 (see Procedural Order No.9, uploaded here under "Related Documents").

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