39 Million Taxpayer Dollars Up In Smoke: Government forced to release Philip Morris Tobacco Plain Packaging ISDS Legal Costs

2 July 2018

After an almost two year transparency battle with the Federal Government, the Department of Health has been forced to release the total legal costs of defending its tobacco plain packaging laws in the case brought by Philip Morris tobacco company against the Australian Government.

The cost of the Investor-State Dispute Settlement (ISDS) litigation was $38,984,642.97

Centre Alliance Senator Rex Patrick said he is blown away by this mammoth cost to the taxpayer. “This is exactly why Australia must stop signing up to Free Trade Agreements with these insidious ISDS provisions in them."

In 2012 the High Court determined that legislation relating to plain packaging of tobacco products was constitutional. That did not deter Philip Morris from shifting some assets to Hong Kong, claiming to be a Hong Kong company, and using the ISDS provisions in an obscure 'Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments' to try to usurp the High Court's decision.

The case was heard by a tribunal of investment lawyers meeting in Singapore.

“Thankfully Australia won the case because the tribunal found it was not truely a Hong Kong company, but only after four years and $39 million in legal costs," said Rex.

“I accept the Government had to defend the matter, but if we hadn’t signed up to the Hong Kong agreement with ISDS provisions in it then there would not have been a tribunal hearing. Imagine what health outcomes could have been achieved with that $39 million.”

ISDS provisions allow corporations to sue governments when they change their laws or policies. The European Union is now walking away from ISDS inclusion in trade agreements after some notorious ISDS cases enraged European citizens. In 2009 EuroEnergy giant Vattenfall commenced proceedings against the German government for billions of dollars over its decision to phase out nuclear power in the wake of the Fukushima disaster. In 2017 British oil and gas company, Rockhopper, instituted proceedings against the Italian Government after it banned new exploration and production activity within 12 nautical miles of the coast amid concerns for the environment and the high risk of earthquakes in the area.

The TPP-11 agreement, which is currently being examined by a Senate inquiry, has ISDS provisions in it. It exposes Australian taxpayers to tens of millions of dollars in legal fees and potentially billions in damages in the event that the Australian parliament makes changes to laws that don’t suit foreign companies.

The release of the information is a win for transparency, but the information should have been released immediately upon request in 2016. The Department of Health has been forced to release the amount to Senator Patrick after flouting FOI law for purely delaying purposes. The public needs to have a conversation about ISDS and the Government, by withholding information, is making it very much a one sided discussion.

“Blindfolded, we’re led into manholes by those in charge of them," said Rex.

Senator Patrick would like to thank Sydney Barrister Mandy Tibbey and lawyer Stephen Blanks for their legal assistance and guidance in pursuing the release of this information in the Administrative Appeals Tribunal.

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