Finally revealed: government legal costs of $39 million in Philip Morris ISDS case

July 2, 2018: Centre Alliance Senator Rex Patrick last Friday succeeded in obtaining the total legal costs to Australia of defending its tobacco plain packaging laws in the case brought by Philip Morris tobacco company against the Australian Government under investor-state dispute settlement provisions.

The cost was $38,984,642.97.

Senator Patrick said he is blown away by this mammoth cost to the taxpayer. “This is exactly why Australia must stop signing up to Free Trade Agreements with these insidious ISDS provisions in them."

In 2012 the High Court determined the tobacco plain packaging law was constitutional. But Philip Morris had also shifted some assets to Hong Kong, claiming to be a Hong Kong company, and used the ISDS provisions in an obscure investment agreement between Australia and Hong Kong to try to bypass the High Court's decision.

The case was heard by a tribunal of investment lawyers meeting in Singapore.

“Thankfully Australia won the case because the tribunal found it was not truly a Hong Kong company, but only after four years and $39 million in legal costs," said Senator Patrick.

“I accept the Government had to defend the matter, but if we hadn’t signed up to the Hong Kong agreement with ISDS provisions in it then there would not have been a tribunal hearing. Imagine what health outcomes could have been achieved with that $39 million.”

Senator Patrick ran the case in the Administrative Appeals Tribunal because both the Australian government and Philip Morris refused to divulge the costs at the time of the decision in 2016, and then the Turnbull government appealed the Information Commissioner’s decision that the costs should be revealed. Sydney Barrister Mandy Tibbey and Solicitor Stephen Blanks prosecuted the case pro bono.

The TPP-11 agreement, which is currently being examined by a Senate inquiry, has ISDS provisions. It exposes Australian taxpayers to tens of millions of dollars in legal fees and potentially billions in damages in the event that the Australian parliament makes changes to laws that don’t suit foreign companies. The European Union no longer includes ISDS provisions in its trade negotiations, including the current talks with Australia, because the European Court of Justice found them to be incompatible with EU law and national sovereignty.