Philip Morris, which has a subsidiary company incorporated in Hong Kong, initiated the first ISDS case against Australia under the 1993 investment treaty between Hong Kong and Australia. It claimed that the country’s new plain packaging rules for tobacco companies infringed this treaty.

No jurisdiction

Shortly before Christmas, three arbitrators issued a unanimous decision agreeing with Australia’s position that the tribunal, which was constituted in 2002 within the UN’s Permanent Court of Arbitration, has no jurisdiction to hear Philip Morris Asia’s claim.

‘Safeguards inadequate’

Senator Scott Ludlam warned that ISDS provisions in the 12-nation Trans ­Pacific Partnership ‘risk our ­capacity to legislate to protect our environment, labour standards and health.’ But Luke Nottage, professor of Comparative and Transnational Business Law at the University of Sydney, said Australia’s recent investment treaties and FTAs, including the TPP, incorporated many more procedural and substantive safeguards to limit vexatious claims. He commented: ‘Eventually the ISDS system may add some or all elements of a permanent investment court ... since home states often won’t ­initiate claims on behalf of their companies, due to diplomatic or ­financial costs.’ Sources: The Australian Business Review; Financial Times