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British American Tobacco Ltd v. Ministry of Health [Kenya] [February 17, 2017]
British American Tobacco appealed a 2016 court decision, which upheld nearly all elements of Kenya’s Tobacco Control Regulations. The appeals court ruled that the tobacco company’s appeal had no merit and affirmed the decision of the lower court. The earlier ruling upheld nearly all elements of the Regulations, which are designed to implement the Tobacco Control Act, including:
- a 2% annual contribution by the tobacco industry to help fund tobacco control education, research, and cessation;
- graphic health warnings;
- ingredient disclosure;
- smoke-free environments in streets, walkways, and verandas adjacent to public places and in private vehicles where children are present;
- disclosure of annual tobacco sales and other industry disclosures; and
- regulations limiting interaction between the tobacco industry and public health officials.
The appeals court agreed with the lower court that the tobacco company had been given adequate opportunities for participation in the development of the regulations and that the regulations do not violate the tobacco company’s constitutional rights.
Japan Tobacco International and Others v. Ministry of Health (plain packaging laws) [France] [December 23, 2016]
Legal Challenges to the plain packaging of tobacco products laws dismissed.
On December 23, 2016 the Conseil d’Etat (the Council of State, the highest administrative jurisdiction in France) dismissed six legal challenges that were brought against the tobacco products plain packaging laws. Previously, in January 2016, the Constitutional Council had also upheld the law as in accordance with the constitution, on a referral from members of parliament.
In brief, six cases were brought challenging the regulations - four by the tobacco companies, one from the confederation of tobacco retailers, and one from a tobacco paper manufacturer. The Conseil d'Etat dismissed all the claims and held that:
- The ban on using figurative, semi-figurative signs, and logos on packaging of tobacco products was valid because the brand and variant name is still permitted allowing the identification of the product.
- Plain packaging constitutes an infringement of property rights, but that this infringement is justified in the light of the objective pursued (public health) and because the measure regulates the use of trademarks but does not completely ban them.
- There was no 'deprivation' of property rights.
- For the same reasons, the Conseil d'État held that the national legislation is a quantitative restriction on the importation of goods but this is in conformity with European Union law because the introduction of such restrictions is permitted where they are justified by a public health objective and the protection of human life. The court held that in this case, the challenged provisions must be considered as unable to do anything other than, over time, reduce the consumption of tobacco. The evidence in the case file also showed that neutral packaging would reduce the attractiveness of tobacco products. The measures were therefore proportionate and justified.
A summary of the decisions from the two separate courts is attached in French and English in the section on "Related Documents".
BAT v. UK Department of Health (Appeal) [United Kingdom] [November 30, 2016]
An appeal against the earlier High Court judgment which upheld the UK's Standardised Packaging of Tobacco Products Regulations 2015.
British American Tobacco, Japan Tobacco International and Imperial Tobacco, together with the tipping paper company Tannpapier, appealed the High Court judgment of May 2016. The Appeal Court rejected all grounds of appeal.
The appeal concerned the nature of the claimants' trade mark rights, the extent to which the Regulations interfere with those rights and the lawfulness of any interference. The Claimants also appealed the High Court judgment on the proportionality of the Regulations. The case concerned issues of European Union law and the European Convention on Human Rights (the right to property in Article 1 of Protocol 1), as well as domestic common law.
The Appeal Court confirmed that a positive 'right to use' a registered trade mark did not exist in either domestic law, European Union law or international law. The Court also confirmed that the Regulations amounted to a control on the use of the tobacco trade marks and did not amount to a deprivation of those marks. The Regulations were a proportionate response to the public health objectives and struck a fair balance between the objectives and the interference with the claimant's rights.
Philip Morris Sàrl v Uruguay [Uruguay] [July 08, 2016]
In February 2010, three subsidiary companies of Philip Morris International (PMI), initiated an investment arbitration claim at the International Centre for the Settlement of Investment Disputes (ICSID), an arbitration panel of the World Bank. PMI alleged that two of Uruguay’s tobacco control laws violated a Bilateral Investment Treaty (BIT) with Switzerland. PMI brought the claim after legal challenges in Uruguay’s domestic courts by the Philip Morris subsidiaries had failed. The panel of three arbitrators published their ruling on July 8, 2016, dismissing all PMI’s claims and awarding Uruguay its legal costs ($7million).
The two “Challenged Measures” required:
1. Large graphic health warnings covering 80% of the front and back of cigarette packets; and
2. The Single Presentation Requirement (SPR) That limited each cigarette brand to just a single variant or brand type (eliminating brand families to address evidence that some variants can mislead consumers and falsely imply some cigarettes are less harmful than others)
PMI alleged that the 80% health warnings left insufficient room on the packs for it to use its trademarks and branding as they were intended, and the SPR meant it could not market some of its brands such as Marlboro Gold. PMI therefore alleged that Uruguay had breached the terms of the BIT because the Challenged Measures: Expropriated the property rights in PMI’s trademarks without compensation; were arbitrary as they were not supported by evidence to show they would work and so did not accord PMI with Fair and Equitable Treatment; did not meet PMI’s Legitimate Expectations of a stable regulatory environment or to be able to use their brand assets to make a profit; and that the Uruguayan courts had not dealt properly or fairly with PMI’s domestic legal challenges such that there was a Denial of Justice.
Philip Morris sought an order for the repeal of the Challenged Measures and for compensation in the region of $25 million.
The tribunal’s findings
This highly anticipated award addressed a number of fundamental legal issues concerning the balance between investor rights and the space available for states’ to regulate for public health. While there is no doctrine of binding precedent in international arbitration law, the development of an investment treaty case law and jurisprudence means that the wider value of each award can be very significant. This ruling highlighted the importance of the WHO Framework Convention on Tobacco Control (FCTC) in setting tobacco control objectives and establishing the evidence base for measures, and confirmed that states therefore need not recreate local evidence. It addressed the wide ‘margin of appreciation’ and deference provided to sovereign states in adopting measures or decisions concerning public health. The tribunal also identified that a state need not prove a direct causal link between the measure and any observed public health outcomes – rather that it was sufficient that measures are an attempt to address a public health concern and taken in good faith.
The ruling sets an extremely high bar for any foreign investor seeking to bring an investment arbitration challenge against a non-discriminatory public health measure that has a legitimate objective and that has been taken in good faith
BAT v. UK Department of Health [United Kingdom] [May 19, 2016]
The judgment dismissed all grounds of challenge against the UK's standardised (or "plain") packaging regulations. The judgment has significant wider implications because Mr Justice Green carefully considered all the evidence as part of the proportionality analysis, which will be similar to the justification analysis for plain packaging in most other jurisdictions. He was highly critical of the evidence put forward by the tobacco industry and provided a damning critique of individual studies and experts as well as making wider criticisms of the tobacco companies including that they failed to disclose any internal documents about their research or consideration of the impact of plain packaging on their business or smoking rates. He also linked his conclusions to the 2006 judgment of Judge Kessler in USA v Philip Morris Inc et al when she found, upon the basis of comprehensive evidence which included internal documents, that the tobacco companies were well aware of the strong causal nexus between advertising and consumer reaction.
The judge's conclusions on whether plain packaging amounts to an expropriation of the tobacco trade marks; on their claim for compensation; on the relevance of the FCTC and its guidelines; and on the compatibility with the WTO TRIPS agreement all have wider international relevance.
A summary of the key findings that have wider application is in the additional documents.
The McCabe Centre has produced an analysis of the key points for other jurisdictions which can be found here: http://www.mccabecentre.org/downloads/McCabe_Centre_-_Key_Points_on_UK_plain_packaging.pdf
Karnataka Beedi Industry Association v. Union of India [India] [May 04, 2016]
Using the powers conferred by India’s omnibus tobacco control law, the government introduced new graphic health warnings in October 2014 that, among other things, increased the graphic health warning size from 40 percent of one side to 85 percent of both sides of tobacco product packaging and amended the rotation scheme of the warnings. The Karnataka Beedi Industry Association, the Tobacco Institute of India, and other pro-tobacco entities challenged the validity of the 2014 pack warning rules in five cases in the Karnataka High Court – Bengaluru, and the court initially stayed the implementation of the warnings via interim orders. Following a petition by tobacco control advocates, the court lifted the stays, and a division bench of the court affirmed the decision on appeal. The association and others challenged this ruling in the Supreme Court. Paving the way for immediate implementation of the warnings, the Supreme Court, on May 4, 2016, directed that the matter be decided within six weeks in the Karnataka High Court by a bench constituted by the Karnataka Chief Justice and that any stays of the warnings in other high courts not be given effect until the conclusion of the matter. The Supreme Court identified pending pack warning challenges in courts throughout India (more than 27 in number) and transferred these cases to Karnataka. A Karnataka High Court ruling in this matter should resolve all challenges to the legality of the pack warning rules. The case still is pending on the merits in Karnataka.
R (on the Application of) Philip Morris Brands SARL et al. v. Secretary of State for Health [European Union] [May 04, 2016]
A challenge to the validity of the European Union’s (EU) Tobacco Products Directive (TPD) 2014 brought by Philip Morris and British American Tobacco was dismissed on all grounds by the Court of Justice of the European Union (CJEU). The amended TPD was adopted in April 2014 and provides a wide range of requirements relating to emissions, reporting, 65% pictorial health warnings, packaging and labelling, a ban on characterising flavors and other additives, and regulates e-cigarettes. Article 24(4) permits member states to adopt further requirements to standardise packaging. The TPD applies to all 28 countries within the EU.
In this case, Philip Morris and BAT brought a judicial review against the United Kingdom based on the government’s intention to implement the TPD requirements in UK legislation. The tobacco companies claimed that parts of the TPD and the Directive as a whole, were invalid because it was incompatible with the EU Treaties; was not proportionate or supported by evidence; was not sufficiently harmonising in nature; and contravened the principle of subsidiarity. The UK court hearing the case referred questions on the interpretation of EU law to the CJEU. The CJEU upheld all aspects of the TPD, including provisions to require pictorial warning labels, to prohibit menthol cigarettes, and to allow countries to prohibit cross-border sales and to adopt additional packaging restrictions, such as plain packaging. The court noted that the EU may act to prevent obstacles to the trade of tobacco products while also ensuring a high level of public health protection. The Court found that the packaging and labelling requirements were proportionate and did not go beyond what were necessary and appropriate.
In addition the court highlighted the importance of the FCTC as a tool for interpretation and stated that it could have a 'decisive influence' on the interpretation of both EU law and Member States' tobacco control legislation.
EU Member States are obliged, under the TPD, to implement most provisions of the TPD into domestic law by May 20, 2016 (although a number of states have been late in their implementation).
Pillbox 38 (UK) Ltd. v. Secretary of State for Health [European Union] [May 04, 2016]
A challenge to the validity of the e-cigarette regulations in the European Union’s (EU) Tobacco Products Directive (TPD) 2014 was dismissed on all grounds by the Court of Justice of the European Union (CJEU). Pillbox 38 (UK) Ltd. (trading under the name "Totally Wicked"), an e-cigarette manufacturer, brought a judicial review against the UK government challenging its intention to implement the TPD into domestic law on the basis that it claimed the TPD was not valid. The TPD Article 20 sets out requirements for e-cigarettes for all EU Member States. The UK court hearing the case asked the CJEU for a reasoned opinion on the validity of Article 20.
The CJEU found the TPD to be valid and upheld all of the e-cigarette requirements, including health warnings; a ban on most e-cigarette advertising; a limit on nicotine levels and amounts and e-liquid container sizes; a requirement to notify the government before introducing a new product; and the requirement to include a leaflet with the product containing information such as a list of ingredients. Firstly, because the purpose of the Directive is to harmonise regulations across the EU, the court found that there were significant divergences between the regulations in different Member States which justified the EU regulating the market. The court found that it was permissible to regulate e-cigarettes differently than other tobacco products in part because e-cigarettes are novel products and there is insufficient information on their health effects. The identified and potential risks linked to the use of e-cigarettes means the EU may act according to the precautionary principle.
British American Tobacco Kenya Ltd. v. Ministry of Health [Kenya] [March 24, 2016]
British American Tobacco's Kenyan subsidiary filed a lawsuit claiming that Kenya’s Tobacco Control Regulations are unconstitutional. The court ruled against the tobacco company, finding that the process of developing the regulations was lawful and conducted with sufficient participation by the tobacco industry. The court upheld nearly all elements of the Regulations, which are designed to implement the Tobacco Control Act, including:
a 2% annual contribution by the tobacco industry to help fund tobacco control education, research, and cessation;
graphic health warnings;
smoke-free environments in streets, walkways, verandas adjacent to public places;
disclosure of annual tobacco sales and other industry disclosures; and
regulations limiting interaction between the tobacco industry and public health officials.
The court specifically noted that the Tobacco Control Act and Regulations are intended to comply with the Framework Convention on Tobacco Control. Additionally, the court acknowledged the harm caused by tobacco products and stated it would make its decision within the context of a public health system balanced against the commercial rights of the tobacco company.
The court struck down a few minor elements of the regulations, ruling that (1) the tobacco industry is not required to provide evidence of its market share to the government; and (2) that penalties for violation cannot exceed the maximums authorized by law.
The court ruled that the regulations should take effect six months after the date of the decision.
Tobacco Institute of India v. Union of India [India] [March 11, 2016]
The Union of India and Health For Millions filed an interim application seeking vacation of the High Court’s December 4, 2015 stay (and January 6, 2016 modification) of a 2014 Ministry of Health notification establishing pack warnings on 85% of both sides of tobacco product packaging. They alleged that a May 2009 Supreme Court order in a pack warnings matter (W.P. 549/2008) still pending before the Supreme Court directed that no court in India may pass orders inconsistent with the May 2009 order and that this May order was not considered in the High Court’s December 4, 2015 ruling. The Karnataka Beedi Association and others maintained that the May 2009 Supreme Court order pertains to implementation of the 2008 pack warning rules and not the October 2014 rules. They argued that the order thus cannot be relied upon in this matter. Noting, among other things, that Health For Millions has filed an application for rigorous enforcement of the 2014 rules in W.P. 549/2008, the court observed that the May 2009 Supreme Court order is applicable to the writ petitions in the Karnataka High Court as issues relating to both the 2008 and 2014 rules are before the Supreme Court. For this reason, the court held that the December 4, 2015 stay of the 2014 pack warnings rules must be lifted. The Karnataka Beedi Association and others appealed, arguing that the constitutional validity of neither the 2008 nor the 2014 rules was at issue in the Supreme Court. Instead, they maintain that the Supreme Court was adjudicating a writ of mandamus for the rules’ implementation. Accordingly, the association argues that the high court must review the constitutional validity of the rules. The high court disagreed and upheld the judge’s order lifting the stay. The court also invited the association to approach the Supreme Court for further clarity so that the court can proceed further in these matters.