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Japan Tobacco International and Others v. Ministry of Health (plain packaging laws) [France] [December 23, 2016]

Legal challenges to the plain packaging of tobacco products laws dismissed. 

On December 23, 2016 the Conseil d’Etat (the Council of State, the highest administrative jurisdiction in France) dismissed six legal challenges that were brought against the tobacco products plain packaging laws. Previously, in January 2016, the Constitutional Council had also upheld the law as in accordance with the constitution, on a referral from members of parliament.

In brief, six cases were brought challenging the regulations - four by the tobacco companies, one from the confederation of tobacco retailers, and one from a tobacco paper manufacturer. The Conseil d'Etat dismissed all the claims and held that:

1. The ban on using figurative, semi-figurative signs, and logos on packaging of tobacco products was valid because the brand and variant name is still permitted allowing the identification of the product.
2. Plain packaging constitutes an infringement of property rights, but that this infringement is justified in the light of the objective pursued (public health) and because the measure regulates the use of trademarks but does not completely ban them.
3. There was no 'deprivation' of property rights.
4. For the same reasons, the Conseil d'État held that the national legislation is a quantitative restriction on the importation of goods but this is in conformity with European Union law because the introduction of such restrictions is permitted where they are justified by a public health objective and the protection of human life. The court held that in this case, the challenged provisions must be considered as unable to do anything other than, over time, reduce the consumption of tobacco. The evidence in the case file also showed that neutral packaging would reduce the attractiveness of tobacco products. The measures were therefore proportionate and justified.

A summary of the decisions from the two separate courts is attached in French and English in the section on "Related Documents". 

Philip Morris SÀRL v. Uruguay [Uruguay] [July 08, 2016]

In February 2010, three subsidiary companies of Philip Morris International (PMI) initiated an investment arbitration claim at the International Centre for the Settlement of Investment Disputes (ICSID), an arbitration panel of the World Bank. PMI alleged that two of Uruguay’s tobacco control laws violated a Bilateral Investment Treaty (BIT) with Switzerland. PMI brought the claim after legal challenges in Uruguay’s domestic courts by the Philip Morris subsidiaries had failed. The panel of three arbitrators published their ruling on July 8, 2016, dismissing all PMI’s claims and awarding Uruguay its legal costs ($7 million).  

The two “Challenged Measures” required:

1.      Large graphic health warnings covering 80% of the front and back of cigarette packets; and

2.      The Single Presentation Requirement (SPR) that limited each cigarette brand to just a single variant or brand type (eliminating brand families to address evidence that some variants can mislead consumers and falsely imply some cigarettes are less harmful than others).

PMI alleged that the 80% health warnings left insufficient room on the packs for it to use its trademarks and branding as they were intended, and the SPR meant it could not market some of its brands such as Marlboro Gold. PMI therefore alleged that Uruguay had breached the terms of the BIT because the Challenged Measures: Expropriated the property rights in PMI’s trademarks without compensation; were arbitrary as they were not supported by evidence to show they would work and so did not accord PMI with Fair and Equitable Treatment;  did not meet PMI’s Legitimate Expectations of a stable regulatory environment or to be able to use their brand assets to make a profit; and that the Uruguayan courts had not dealt properly or fairly with PMI’s domestic legal challenges such that there was a Denial of Justice.

Philip Morris sought an order for the repeal of the Challenged Measures and for compensation in the region of $25 million.

The tribunal’s findings

This highly anticipated award addressed a number of fundamental legal issues concerning the balance between investor rights and the space available for states’ to regulate for public health. While there is no doctrine of binding precedent in international arbitration law, the development of an investment treaty case law and jurisprudence means that the wider value of each award can be very significant. This ruling highlighted the importance of the WHO Framework Convention on Tobacco Control (FCTC) in setting tobacco control objectives and establishing the evidence base for measures, and confirmed that states therefore need not recreate local evidence.  It addressed the wide ‘margin of appreciation’ and deference provided to sovereign states in adopting measures or decisions concerning public health. The tribunal also identified that a state need not prove a direct causal link between the measure and any observed public health outcomes – rather that it was sufficient that measures are an attempt to address a public health concern and taken in good faith.

The ruling sets an extremely high bar for any foreign investor seeking to bring an investment arbitration challenge against a non-discriminatory public health measure that has a legitimate objective and that has been taken in good faith.

Non-Smokers' Rights Association v. British American Tobacco [France] [September 12, 2013]

This is an appeal of a 2012 decision that found British American Tobacco (BAT) France guilty of violating the country’s advertising laws. The appeals court affirmed the earlier decision that BAT France and its president were guilty of civil and criminal violations for (1) distributing a poster to 28,000 retailers saying “false cigarette, true risk” with the BAT logo; and (2) publishing a document on the company’s website about a BAT France campaign to raise awareness of counterfeit tobacco cigarettes. The appeals court found that the campaigns had the effect of enhancing BAT’s image and encouraging the sale of tobacco products. The appeals court increased the amount of the fines imposed on BAT France and ruled that the NGO Non-Smokers’ Rights Association had proper standing to file the lawsuit.

ASA Adjudication on Gallaher Ltd. (A12-213116) [United Kingdom] [August 28, 2013]

Cancer Research UK made a complaint to the Advertising Standards Authority (ASA) about an ad from Gallaher Ltd that opposed plain packaging for tobacco. The ad made two claims: (1) that 23.3% of cigarettes smoked in London have unpaid taxes and (2) that 19% of independent shopkeepers in London are considering closing as a result of the illegal tobacco trade. The ASA found that the second claim in the ad had not been substantiated and was misleading and ordered the company not to repeat it.

ASA Adjudication on Gallaher Ltd. (A12-210929) [United Kingdom] [April 17, 2013]

This ruling by the Advertising Standards Authority (ASA) sanctioned Japan Tobacco International (JTI) for misleading advertising for their campaign against plain packaging in the United Kingdom.  The Cancer Research UK, a public health organization, made a complaint about the advertisements of JTI.  The ads claimed that plain packaging of cigarettes would increase the “booming” illicit trade of tobacco and cost the government more than £3 Billion.  The ASA found that both of these claims were misleading and unrepresentative of the true facts.  The ASA ordered JTI and its subsidiary, Gallaher Ltd, to not run the ads again.

Philip Morris Norway AS v. The Norwegian State [Norway] [September 12, 2011]

An importer of tobacco products sued Norway before the Oslo District Court, alleging that the Norwegian ban on tobacco advertising, which included a prohibition on visual product displays in retail locations, was incompatible with the European Economic Area Agreement (EEA). Accordingly, quantitative restrictions on imports and measures having the same effect are prohibited unless they are justified by non-arbitrary and non-discriminatory public health grounds. Prior to issuing an opinion in the case, the district court requested two preliminary rulings from the Court of Justice of the European Free Trade Association States (EFTA) Court (presented in this decision.)  The EFTA Court determined that if the ban did not affect the tobacco products manufactured in Norway as much as it affected the tobacco products imported from other EEA States, the ban would be incompatible with the EEA. Further, the EFTA Court declared that the district court would have to decide whether Norway’s ban was necessary -- that Norway’s legitimate health objective of reducing tobacco use could not be achieved by measures less restrictive than a tobacco product display ban.

ASA Ruling on K. Williams & Others v. British American Tobacco [South Africa] [May 16, 2011]

Based on several consumer complaints, the Advertising Standards Authority (ASA) evaluated a series of billboard, press, and radio ads from British American Tobacco (BAT) South Africa that warned of the dangers of buying illegal cigarettes. For example, one ad showed a woman being hijacked with the words “Danger: people who buy illegal cigarettes possibly help hijackers and robbers.” The ASA found that the ads had violated the country’s Code of Advertising Practice because (1) they were misleading (based on an unproven linkage between illegal cigarettes and violent crime) and (2) they were likely to cause unjustified fear and distress to viewers. The ASA ordered BAT to withdraw the advertising campaign and not to use the ads in the current form again. The ASA dismissed the complaint that the advertising was offensive and said it did not have the authority to rule on the legality of the ads. Instead complaints about illegal tobacco advertising should be made to the agency responsible for enforcing the Tobacco Products Control Act.

Sinclair Collis Limited v. Lord Advocate for Scotland, et al. [United Kingdom] [May 13, 2011]

A tobacco vending machine company challenged the legality of a section of a tobacco control law prohibiting tobacco vending machines. The petitioner argued that the law violates the right to free movement of goods between EU member states and infringes their right to property. The court upheld the law, concluding that the law is valid because of its legitimate public interest in preventing young people from having access to cigarettes from vending machines.

Philip Morris Panama v. Government of Panama [Panama] [March 16, 2011]

Decree 611 interprets Panama's ban on the advertising, promotion and sponsorship of tobacco products to include a ban on tobacco product display at the point of sale.  Philip Morris Panama filed suit in the Contentious Administrative Chamber of the Supreme Court requesting a preliminary injunction against the implementation of Decree 611 and ultimately an order declaring the Decree void. In this decision, the Court denied the preliminary injunction.

ASA Adjudication on Department of Health t/a East & West Midlands Regional Tobacco Group [United Kingdom] [September 30, 2009]

The Advertising Standards Authority (ASA) found no violation of the country’s advertising code for a campaign by East & West Midlands Tobacco Group about the dangers of buying “dodgy” (i.e., smuggled) cigarettes. The campaign included two posters and a leaflet with a picture of a rat’s tail with the text “Dodgy cigs may contain rodent dropping, bugs and dirt.” The ASA found that any distress caused by the unpleasant imagery in the campaign was outweighed by the risk of using illicit tobacco. As a result, the campaign did not violate the advertising codes related to responsible advertising, decency, or fear and distress.

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