Case Note: Philip Morris Asia v Australia

The Journal of World Investment and Trade, Vol. 18, No. 2, pp. 307-319, 2017

Sydney Law School Research Paper No. 16/86

10 Pages Posted: 22 Sep 2016 Last revised: 24 Feb 2017

Jarrod Hepburn

Melbourne Law School

Luke R. Nottage

The University of Sydney Law School ; The University of Sydney - Australian Network for Japanese Law

Date Written: September 29, 2016

Abstract

This case has been a flashpoint for recent debates over investor-state dispute settlement (ISDS). For Australia, subjected to its first ISDS claim, the case triggered extensive public discussion over whether to continue including ISDS clauses in future bilateral investment treaties (BITs) and investment chapters of free trade agreements (FTAs). More broadly, the case has been seen as epitomising all that is wrong with treaty-based ISDS: an unlikeable, pseudo-American multinational invoking a little-known treaty and an opaque arbitral procedure to claim billion-dollar damages arising from legislation enacted to protect public health. This distasteful image is likely to remain, especially in the public consciousness, despite the claim eventually being dismissed for treaty-shopping, and even though the award deserves to be analysed in broader context. Notably, the case is a rare successful invocation of abuse of right under general international law and even lowers the threshold for such an argument. The case may also encourage states to enhance their screening processes specifically to assess and manage litigation risks flowing from admitting a particular foreign investment.

Keywords: Investment Treaty Arbitration, Philip Morris, Tobacco, Plain Packaging, Investor Illegality, Abuse of Right, Treaty-Shopping, Regulatory Chill, Costs and Delays, Transparency

JEL Classification: K10, K30, K33

Suggested Citation

Hepburn, Jarrod and Nottage, Luke R., Case Note: Philip Morris Asia v Australia (September 29, 2016). The Journal of World Investment and Trade, Vol. 18, No. 2, pp. 307-319, 2017; Sydney Law School Research Paper No. 16/86. Available at SSRN: https://ssrn.com/abstract=2842065

Jarrod Hepburn

Melbourne Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Luke R. Nottage (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

The University of Sydney - Australian Network for Japanese Law

Room 640, Building F10, Eastern Avenue
Sydney, NSW 2006
Australia

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