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Second tobacco company challenges new Australia packaging law

A second major tobacco company, Imperial Tobacco, Ltd. [corporate website], on Tuesday filed an action in Australia's High Court [official website] challenging the country's new tobacco packaging laws. Last month, Parliament [official website] approved [JURIST report] the Tobacco Plain Packaging Bill [text], which removes descriptive colors and logos from cigarette boxes and requires a depiction of the negative effects of smoking. Imperial argues that the law violates the Australian Constitution [materials] because it allows the government to take the intellectual property of private companies [Reuters report] without compensation. Tobacco companies challenging the law also maintain that the law will dramatically decrease the value of their brands [AP report]. The Australian government has indicated that they expected challenges to the law, but ultimately believe the law will be allowed to go into effect. The law is currently scheduled to go into effect on December 1, 2012.

Last week, a similar lawsuit was filed [JURIST report] with the High Court by British American Tobacco (BAT) [corporate website]. BAT argued that the new law would flood the black market with fake cigarettes and that the taxpayers would lose out on billions of dollars as a result of lost excise taxes. The High Court could decide to hear the BAT and Imperial cases together. In November, Philip Morris Asia Ltd. (PMA) [corporate website] initiated legal proceedings [JURIST report] on behalf of its Australian subsidiary Philip Morris Ltd. [corporate website]. One hour after the legislation passed, PMA, a Hong Kong based company, filed a Notice of Arbitration under Australia's Bilateral Investment Treaty with Hong Kong [text, PDF], arguing that the law violates the trade deal between Australia and Hong Kong. PMA has also threatened further litigation [AP report] related to the law. Tobacco export countries including Nicaragua, Dominican Republic and Ukraine have also indicated that they may challenge the law as a violation of global trade rules.

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