Philip Morris Asia Initiates Legal Action Against the Australian Government Over Plain Packaging

HONG KONG -- Philip Morris Asia Limited (PMA), Hong Kong, owner of Australian affiliate, Philip Morris Limited (PML), today announced that it has served a notice of claim on the Australian government, stating its intention to pursue legal action over plans to introduce plain packaging in Australia for tobacco products. PMA is taking action under Australia’s Bilateral Investment Treaty with Hong Kong.

“The forced removal of trade marks and other valuable intellectual property is a clear violation of the terms of the bilateral investment treaty between Australia and Hong Kong. We believe we have a very strong legal case and will be seeking significant financial compensation for the damage to our business,” said Anne Edwards, spokesperson for PMA.

PML has a long history in Australia, manufacturing and selling cigarettes since 1954. Over this time, PML has built well-known brands such as Marlboro, Alpine, Longbeach, Peter Jackson, choice and GT. Plain packaging robs PML of its ability to use these brands to differentiate from competitor brands, effectively turning tobacco products into a commodity. Damages caused by plain packaging may amount to billions of Australian dollars.

“Legal action is not a course we take lightly, but the government has unfortunately left us with no other option,” continued Edwards. “The government has consistently ignored the concerns expressed by a broad range of domestic and international stakeholders about the adverse consequences of plain packaging and has failed to demonstrate that the policy will stop people from smoking.”

Renowned law professor at Georgetown University Law Center, Don Wallace Jr., Chairman of the International Law Institute and an expert on investor-state disputes, said “Plain packaging legislation would expose Australia to well-founded claims under the treaty, potentially costing the Australian government billions of dollars in damages.”

The notice served on the Australian government by PMA begins a mandatory period of three months during which the parties must attempt to negotiate a satisfactory outcome. If this is not achieved, PMA will then proceed to the next step of arbitration proceedings pursuant to the Arbitration Rules of the United Nations Commission on International Trade Law 2010.

About Philip Morris International Inc. (PMI)

Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in approximately 180 countries. In 2010, the company held an estimated 16.0% share of the total international cigarette market outside of the U.S., or 27.6% excluding the People’s Republic of China and the U.S. For more information, see www.pmi.com.

About Philip Morris Asia Limited (PMA)

Philip Morris Asia Limited (PMA) manages PMI’s business in the Asia region. PMA is based in Hong Kong where the company was incorporated under the Hong Kong Companies Ordinance in 1994. PMA owns the Australian affiliate, Philip Morris Limited (PML).

About Philip Morris Limited (PML)

Philip Morris Limited (PML) began operations in Australia in 1954 and has more than 800 employees. Based in Melbourne, the company manufactures and sells a number of well known brands, including Marlboro, Alpine, Longbeach, Peter Jackson, choice and GT. In 2010, PML held an estimated 37.5% share of the Australian cigarette market.

About Professor Don Wallace Jr.

Professor Don Wallace Jr. is the Chairman of the International Law Institute, a senior member of the international law faculty at Georgetown University Law Center, and a renowned expert on investor-state disputes. A graduate of Harvard Law School, Professor Wallace is a member of the US Secretary of State’s Advisory Committee on Private International Law and a US delegate to the United Nations Commission on International Trade Law (UNCITRAL). He has also been a dispute settlement panelist for the World Trade Organization in Geneva and an arbitrator in cases for the International Centre for Settlement of Investment Disputes (ICSID).