C6

Phần A
The network of international investment agreements (IIAs) has expanded to
encompass more than 5,700 different agreements, with almost every country in the
world being part to at least one of the bilateral investment treaties, double taxation
treaties and other international agreements with investment provisions (such as free
trade agreements and economic cooperation agreements) that make up this system.
The universe of IIAs has not only grown in numbers, but also in complexity.
Agreements increasingly overlap, as they are concluded at the bilateral, regional,
inter-regional, sectoral, plurilateral and multilateral level. And they become more
multifaceted, as they cover not only investment issues per se, but also related issues
such as trade, services, intellectual property, industrial policies, labour issues,
movement of personnel, environmental concerns, and others.
In the absence of a global body administering the process, international investment
rulemaking lacks system-wide coordination, and countries continue to conclude
investment treaties on an individual basis, thereby further perpetuating and
accentuating the existing IIA patchwork - the so-called "spaghetti bowl".
While these developments offer important opportunities, the increasingly complex
and rapidly evolving IIA universe also poses major challenges for States and firms
alike.
• The challenges for firms include keeping track of latest developments in
international investment rulemaking and effectively taking advantage of
them in their business planning and operation, as well as in maintaining
good relations with their host countries.
• The challenges for countries include keeping the treaty network
consistent and transparent, and - above all - formulating the "right"
agreements in terms of balancing the interests of host countries, home
countries and foreign investors, as well as strengthening the development
dimension.
There is a risk that the IIA system could eventually degenerate into an increasingly
non-transparent hodgepodge of diverging rules that countries, especially capacity-
constrained developing countries, find more and more difficult to cope with.
An international investment framework remains an important goal, although
there is currently little prospect to make substantial progress in this area. A collective
effort could significantly contribute to making the existing system of international
investment rules function more effectively and efficiently, and making it more
conducive to growth and development.

1
Phần B
Làm rõ phạm vi bảo hộ trong hiệp ước: từ chối lợi ích → đọc thêm
tranh chấp Philip Morris v. Australia
Mô hình BIT của Hoa Kỳ, 2004
Điều 17: Từ chối lợi ích
2. Bên A có thể từ chối lợi ích trong Hiệp ước này của nhà đầu tư phía Bên B
đối với doanh nghiệp hoặc khoản đầu tư của Bên B, nếu doanh nghiệp đó không
có hoạt động kinh doanh đáng kể trên lãnh thổ của bên A, hoặc trong trường
hợp nhà đầu tư thuộc một nước không phải thành viên của Hiệp ước, hoặc thuộc
Bên từ chối điều khoản này trong hiệp ước sở hữu và nắm quyền kiểm soát doanh
nghiệp
Nguyên nhân từ chối: (a) Doanh nghiệp không có hoạt động kinh doanh đáng kể
trên lãnh thổ của nước thành viên Hiệp ước, (b) doanh nghiệp được kiểm soát
bởi nhà đầu tư ở nước không phải thành viên của Hiệp ước hoặc một nước từ
chối điều khoản này (US?), (c) doanh nghiệp được kiểm soát bởi nhà đầu tư
thuộc nước không phải là thành viên Hiệp ước và Hoa Kỳ không duy trìquan hệ
ngoại giao hoặc quan hệ kinh tế bình thường với nước đó
EU-VN FTA: Yêu cầu tham gia vào các hoạt động kinh doanh thực chất (Điều
1.4 C1)
Phần C

2
 INVESTIGATING THE IMPACT OF CORPORATE COURTS
ON THE GROUND – THE TRUTH IS OUT THERE!

CASE NAME:
PHILIP MORRIS V AUSTRALIA
SUMMARY:
Tobacco giant sues Australia over
plain packaging for cigarettes

STATUS:
Australia won on a technicality

AT STAKE:
Unknown but in the billions

DETAILS:
Case started in November 2011 using
an Australia-Hong Kong investment deal;
Examples of the plain packaging used for Marlboro cigarettes in
arbitrators gave their decision in Australia in 2014. Photo courtesy of Dr. David Hammond at the
December 2015 University of Waterloo and Tobacco Labelling Resource Centre.

WHAT IS THE CASE ABOUT?
In April 2010, the Australian government announced
that it was planning to introduce new rules to require
plain packaging on cigarettes and other tobacco
products to support public health. Similar to laws
later introduced into the UK, this meant that while
the brand name appears in a uniform font, all the
rest of the packet would be health warnings on a
drab colour. All logos and branding images would
have to be stripped out.
Following this announcement, two things happened
over the next couple of years: Australia went through
its usual legislative processes to bring in the law
and tobacco giant Philip Morris – who make
Marlboro cigarettes – restructured its business.
Philip Morris’s operations in Australia had been
previously owned in Switzerland but as a result of
the restructure it was now owned in Hong Kong.
Hong Kong has an Investor-State Dispute Settlement
(ISDS) deal with Australia, whereas Switzerland does
not (technically there is one, but it is limited to the
energy sector, so of no use to Philip Morris).
Australia passed the Tobacco Plain Packaging
Bill in 2011 and the law came into effect in 2012,
making Australia the first country in the world to
introduce plain packaging.
On the same day as the bill was passed into law,
Philip Morris brought an ISDS case against Australia.
CORPORATION’S COMPLAINT
Philip Morris complained that preventing it from
displaying its trademarks would cause a substantial
loss of market share, saying “Without branding,
PML’s products are not readily distinguishable to
the consumer from the products of competitors”.
It claimed this was “tantamount to expropriation”.
At the same time as the ISDS case, Philip Morris
and other tobacco corporations also challenged
the Australian law in the national courts. They lost,
and that judgment makes many references to
public health. An ISDS case however interprets
a case through a much narrower lens.
Philip Morris’s specific demand in bringing the case
was for Australia to repeal the law. Otherwise it
would claim “an amount to be quantified but of the
order of billions of Australian dollars”. ISDS is often
implicitly used as a threat to make a government
back down, but it is rarely said so openly and explicitly.
In 2015, Philip Morris lost the case on a technicality.
The ISDS tribunal considered that Philip Morris’s
restructure was done solely in order to be able to
bring the ISDS case and therefore rejected it. Had it
been judged on the actual substance of the case, it
is by no means sure that they would have lost.
The tobacco exception in the
Trans-Pacific Partnership
The Trans-Pacific Partnership (TPP, now
known as CPTPP) is a trade deal between
eleven Asia-Pacific countries, including
Australia. The deal has ISDS in it, but at
Australia’s insistence there is a specific
carve-out that excludes it being used for
tobacco control measures.
This reveals the weakness of other, more
general, clauses in such trade deals which
are supposed to provide protection for the
public interest. TPP includes mention that
governments’ ‘right to regulate’ should not
be undermined by the deal. If this was a
strong, enforceable part of the deal, Australia
would have felt it was sufficient to rely on
this, but it is not. It is just cosmetic. Having
gone through the reality of the Philip Morris
case, Australia didn’t place any trust in flimsy
rhetoric, and instead demanded a tough
specific exception.
When there is political will, policies in
the public interest can be protected from
trade deals.
Investor-State Dispute Settlement (ISDS,)
or ‘corporate courts’, gives corporations far
reaching privileges and access to their own
legal system to enforce them. This mechanism
threatens society, democracy and the planet.
STOP ISDS!
OUR VERDICT
Tobacco companies have been masters in using ISDS
to bully countries into abandoning policies or laws,
either through the threat or the reality of a case. This
is known as ‘regulatory chill’ and Philip Morris has
been at the forefront of this in the tobacco industry.
Plain packing was being discussed in the 1990s
and it is thought that threats from Philip Morris and
others caused Canada to drop the idea back then.
As well as suing Australia over plain packaging,
Philip Morris also sued Uruguay in 2010 over its
anti-smoking measures. These included new rules
requiring health warnings on cigarettes, banning
sports sponsorship and banning smoking in
enclosed public spaces. Philip Morris eventually
lost the case in 2016.
When Togo wanted to introduce images in health
warnings on cigarettes, Philip Morris wrote to them
threatening to bring an ISDS case. Togo’s annual
GDP is £3.4bn; Philip Morris’ annual revenue is £64bn.
Often the effect of regulatory chill is not directly
to the country being sued but is instead to scare
other countries from doing the same. New Zealand
started looking at plain packaging at the same time
that Australia did. However, once the legal challenges
came, the whole process in New Zealand slowed to
a crawl. It only eventually introduced plain packaging
in 2018, after Australia had won.
Regulatory chill is one of the toxic effects of ISDS
on democracy in our societies and it has been used
by corporations in many other industries as well.
MORE INFO
Last week tonight with John Oliver on tobacco
https://www.youtube.com/watch?v=6UsHHOCH4q8
(or search for ‘tobacco John Oliver’ on YouTube)