Guidelines for Implementation of Article 13

The purpose of the guidelines, as stated under the first paragraph, is “to assist Parties in meeting their obligations under Art. 13 of the FCTC”. It is stressed that they are drafted in consideration of “the evidence and the experience of the Parties” that have successfully contained tobacco advertising, promotion and sponsorship.

As mentioned earlier, the Guidelines for Implementation of Art. 11 addresses plain packaging in connection with the health warnings. Similarly, the Guidelines for Implementation of Art. 13 addresses plain packaging under the title “Packaging and product features”, and refers to those guidelines. This is an example of how coexisting tobacco control strategies can complement each other.

As in the case with Art. 11, the guidelines recommend implementation of plain packaging within the scope of the substantive provision under Art. 13. According to the guidelines, any features inherent in regular tobacco packaging, such as brand logo, colours, fonts, pictures, shapes and materials cultivate and promote brand identity. These are thus used to attract the consumers, which is what advertising and promotions do.

Even though the experimental studies and other evidence that indicates how effectively tobacco companies can use the packaging and product design to attract the consumers are not referenced in the guidelines, those are clearly the sources of this assertion. This is particularly the case when regular forms of marketing are denied to the tobacco industry because of the bans. In such cases, packaging and product design are the few remaining tools for the tobacco companies to attract the customers⁹⁹. It is evident that the guidelines were thoughtfully prepared in an effort to extend the ban to cover such

99 Wakefield et. al.; Hammond, Evidence Review; also see above § Ch. 1 (II)(C)(1).

39 remaining tools, in accordance with the term “comprehensive ban”.

This attitude can be seen on the other topics addressed by the guidelines as well.

For instance, the terms “brand stretching” and “brand sharing” are defined in the guidelines and are acknowledged as tobacco advertising and promotion “in so far as they have the aim, effect or likely effect of promoting a tobacco product or tobacco use either directly or indirectly”. Even though they are indirect methods of cultivating brands which can be used in the course of trade, they were included in the scope of the bans in a strict sense of preventing any negative effects on tobacco use.

Recommendation of mandating plain packs were made in the guidelines on the ground that features of packs and products itself were used as means of advertising and promotion in the tobacco market. In other words, the features used on a regular packaging are included in the comprehensive ban as mandated by the Art. 13 as per the guidelines, and thus plain packaging, which is devoid of all of these features, must be implemented in accordance with the binding obligation under the Art. 13¹⁰⁰.

In this way, plain packaging’s purpose of reducing the attractiveness of tobacco products and neutralizing advertising and promoting functions of the packages, is accepted as a complimentary requirement within the scope of bans on advertising and promotion by the guidelines.

100 The features of tobacco products and their packaging that were to be removed are features such as: logo, colours, fonts, pictures, shapes and materials.

40

§ CHAPTER TWO

OVERVIEW OF LEGAL DISPUTES CONCERNING PLAIN PACKAGING LEGISLATIONS OF CERTAIN COUNTRIES

I. INTRODUCTION

As mentioned earlier, the idea of mandating plain packaging started to be seriously considered in various countries, particularly after the adoption of FCTC and its relevant guidelines that recommend it. Although tobacco control measures imposed increasing restrictions on tobacco industry over the years, one may argue that plain packaging was the final straw for the industry, since it deprived them of using their IP rights on packaging which was the final frontier they use to communicate with customers for the purposes of promotion and advertisement. Members of the tobacco industry, therefore, raised many arguments against legitimacy of plain packaging in an effort to dissuade governments from implementing it. Some of the legal arguments against the compatibility of plain packaging with laws were in fact plausible and casted doubts on its implementation.

For one, certain rights of private parties including IP rights are directly affected by plain packaging, because it annihilates the freedom of tobacco companies to design the packaging and appearance of their products. In that way, the right owners lose the utility and value of their IP assets, and particularly their trademarks which are protected under the domestic laws of most jurisdictions as well as international trade agreements.

The balance between a state’s discretion in regulating for the public interest and the preservation of private parties’ IP rights thus came into question with Australia’s move to enacts the world’s first plain packaging legislation.

41 Tobacco industry was expected to pursue all legal remedies against plain packaging laws in any forum possible. International investment treaties that allow an investor to file arbitration claims against a host state poses a threat of having to pay large amounts of compensations to tobacco companies. Furthermore, WTO’s dispute settlement mechanism allows for member states to file complaints concerning regulations of another member. Availability of such fora that would be likely used against plain packaging laws created a so called “chilling effect” on most governments¹⁰¹. In that vein, the outcomes of the legal challenges mounted against Australia were highly anticipated because they would be decisive in the successful implementation of the subject measure, which would establish a precedent for other states that were considering adopting similar regulations.

In this chapter, we will discuss the legal challenges mounted against plain packaging legislations on three different routes. For the purposes of this thesis, the core legislation will be the legislation of Australia which introduced world’s first plain packaging regulations. Before reviewing the legal challenges, the Australian legislation and how it regulates the packaging of tobacco products will be briefly summarized. Then, we will discuss three separate legal challenges. The first one is the constitutional challenge filed in the High Court of Australia under a provision of the Commonwealth Constitution which allows the government to acquire property only upon payment of just terms. The second one is an international arbitration dispute filed against Australia under a bilateral investment treaty. The third one is the dispute commenced at the WTO under

101 For a study on how the threat of investment treaty arbitration impact state policies, see Tienhaara K.:

Regulatory Chill and The Threat of Arbitration: A View from Political Science., In Brown C./Miles K.

(Eds.), Evolution in Investment Treaty Law and Arbitration, pp. 606-628, Cambridge 2011.

42 the WTO agreements that Australia is a party.

Since the arbitral tribunal commenced against Australia did not exercise jurisdiction over the dispute, the claims were not examined on their merits. Hence, the decision of the tribunal did not incur any indications for potential investment treaty disputes in relation to plain packaging legislations. Nevertheless, a similar investment treaty dispute filed against Uruguay might provide implications, because it concerns regulations that impose restrictions on tobacco packaging, even though they were not as restrictive as plain packaging. We will, therefore, finally discuss the arbitration case filed against Uruguay and the findings of the arbitral tribunal related to the tobacco companies’

claims¹⁰².