Philip Morris Asia Limited Comments on Tribunal’s Decision to Decline Jurisdiction in Arbitration Against Commonwealth of Australia Over Plain Packaging

Philip Morris Asia Limited (PMAL), a Hong Kong company that is the parent of Philip Morris Australia, said today that an arbitral tribunal has declined jurisdiction to hear the merits of PMAL’s case against the Commonwealth of Australia under Australia’s 1993 Investment Promotion and Protection Agreement (IPPA) with Hong Kong.

“There is nothing in today’s outcome that addresses, let alone validates, plain packaging in Australia or anywhere else,” said Marc Firestone, Philip Morris International Senior Vice President and General Counsel. “It is regrettable that the outcome hinged entirely on a procedural issue that Australia chose to advocate instead of confronting head on the merits of whether plain packaging is legal or even works”.

PMAL filed its claims under the IPPA on November 21, 2011, when the Australian government passed plain packaging legislation. PMAL asserted that the sweeping ban on trademarks breaches the foreign investment protections that the Australian government guaranteed in its IPPA with Hong Kong.

Firestone continued, “This case has never been about a government’s undeniable authority to regulate in the public interest. Nor has there ever been any question that tobacco products merit strict oversight. In our view, the real point is simply this: Even when pursuing tobacco control objectives, governments are still accountable if they choose to use unlawful means. This is the essence of the rule of law.”

The Australian government’s tobacco packaging policy remains the subject of international disagreement. The World Trade Organization (WTO) is currently considering challenges to Australia's legislation by four WTO Members. Separately, courts in Europe are also assessing plain packaging under national and international law. The decision on jurisdiction under the Australia-Hong Kong IPPA has no bearing on any of these proceedings.

Australia’s former Labor government made bold promises regarding the public health benefits that its excessive, expropriatory trademark ban -- which it labeled a policy experiment – would yield. Three years into the experiment, data from a range of sources consistently demonstrate that the promised outcomes are not being delivered.

PMAL is reviewing the Tribunal’s decision in detail and will determine any further course of action.

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Philip Morris International Inc.

Philip Morris International Inc. (PMI) is the leading international tobacco company, with six of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in more than 180 markets. In 2014, the company held an estimated 15.5% share of the total international cigarette market outside of the U.S., or 28.5% excluding the People’s Republic of China and the U.S. For more information, see www.pmi.com.

Philip Morris Asia Limited

Philip Morris Asia Limited (PMAL) manages PMI’s business in the Asia region. PMA is based in Hong Kong where the company was incorporated under the Hong Kong Companies Ordinance in 1994. PMAL owns the Australian affiliate, Philip Morris Limited (PML).

Philip Morris Limited

Philip Morris Limited (PML) began operations in Australia in 1954 as the first affiliate outside of the United States. Based in Melbourne, PML employs more than 500 people and is the second largest distributor of cigarettes in Australia. PML sells a number of well-known brands, including Marlboro, Alpine, Longbeach, Peter Jackson and choice. In 2014, PML held an estimated 34% share of the Australian cigarette market.

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