Big Tobacco lost to Australia over plain packaging - but that doesn't mean that corporate courts 'work'

Late last year tobacco company Philip Morris International’s (PMI) attempted to sue the Australian government for billions over the introduction of plain packing of cigarettes. This court case happened in a secretive court system, just like the one that they are trying to introduce in the EU-USA trade deal, TTIP. PMI failed in their attempt and the case report has just been published.

It is indisputably a good thing that PMI lost the case. But people who argue in favour of the same ‘corporate court’ system  in TTIP (the Investor State Dispute Settlement mechanism, or ISDS) are claiming this as proof that the system works.  justice was done, and the ISDS system functions responsibly to make sure that corporations can’t abuse it.

Here’s five reasons why that’s not true.

1. The cost to the Australian taxpayer was astronomical

The costs of the case are yet to be apportioned. The Australian Government says it has spent Aus$50 million defending this case. This sum might also include the legal costs of a similar challenge via the World Trade Organisation to plain packaging, but it’s still an enormous amount. Under ISDS, the huge cost of defending these cases is often carried by the government, and therefore the taxpayer, regardless of the outcome.

2. The premise of plain packaging was not tested in this case

The case was lost on a technicality relating to which country PMI was registered in at the time that the relevant trade deal was agreed on. The issue of plain packaging and big tobacco’s profits has not been tested in an ISDS case and it’s likely that similar cases will be tried again in the fut

3. Investment Court System wouldn’t make a jot of difference

Despite all the hype about the ‘new’ investment court system (ICS) that the EU has proposed being a real alternative to ISDS, if this or similar cases were brought through ICS, there would be no discernable difference in outcome, only in venue and perhaps the people who would be involved in the case - although that is by no means guaranteed.

4. Regulatory chill

The threat of such court cases, even if they are not successful, inhibit other governments from passing similar laws. The New Zealand government have been holding fire on introducing plain packaging on cigarettes while they see what happens to Australia. The negative effects on health are already being experienced thanks to this case.

5. Public health

There are other public health measures that could be targeted through ISDS. Until there is a full and uncompromising exemption in every Bilateral investment Treaty, in CETA, TTIP and TPP, they will always be vulnerable. 

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