CANBERRA, Australia—Tobacco giant Philip Morris has lost a protracted and costly international legal battle with Australia over laws requiring its products to be sold without brand logos, in a ruling that could embolden more countries to follow suit.

Philip Morris Asia Ltd challenged Australia's laws in 2011, when they were the first of their kind in the world, arguing the legislation breached its intellectual property and trademarks by requiring branding to be removed from packaging and replaced by graphic health warnings.

The maker of Marlboro cigarettes launched the action under Australia's 1993 bilateral investment treaty with Hong Kong, which protects investments made by companies against discriminatory treatment by governments using so-called investor-state dispute settlement clauses.

But both Australia's government and Philip Morris Asia said Friday that the Permanent Court of Arbitration in Singapore, which was to oversee the challenge, had decided it didn't have jurisdiction to consider the case, meaning Australia's laws can remain in force.

"We welcome the unanimous decision by the tribunal agreeing with Australia's position that it has no jurisdiction to hear Philip Morris' claim," Australia's Assistant Health Minister Fiona Nash said in a news release. "Smoking does untold harm to Australians, causing deaths from cancer, lung and heart disease, and hurting families."

Since Australia passed its laws several other countries have introduced similar legislation, and another 20 are considering the idea. The U.K. parliament in March voted to ban branding on cigarette packs as of May 2016, while France also passed legislation recently requiring plain packaging from next year.

Big tobacco companies including British American Tobacco PLC, Imperial Tobacco Group PLC, Japan Tobacco International and Philip Morris International Inc. began presenting legal challenges against plain-packaging laws in London's High Court earlier this month, in a case being watched closely in Europe.

Philip Morris International's Senior Vice President and General Counsel Marc Firestone said it was "regrettable" that Australia's government had chosen a procedural approach that challenged the Singapore tribunal's jurisdiction, rather confronting the merits of plain packaging laws head-on.

"There is nothing in today's outcome that addresses, let alone validates, plain packaging in Australia or anywhere else," Mr. Firestone said, adding that the company was reviewing the decision for a possible appeal.

Lawmakers around the world are stepping up their actions against tobacco packaging. Ireland and Hungary have also passed plain-packaging laws. British American Tobacco failed in 2012 with a challenge to Australia's laws launched through the country's peak High Court. In 2012, a challenge by British American Tobacco against Australia's laws failed in the country's peak High Court.

Australia's laws were introduced by the country's former Labor government to curb smoking-related health issues, with tobacco companies forced to adopt olive green packaging and graphic health warnings in place of their own branding.

"Plain packaging is a legitimate public health measure which is consistent with Australia's international legal obligations," Ms. Nash said.

 

(END) Dow Jones Newswires

December 18, 2015 00:35 ET (05:35 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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