The Chilling Effect: Investor-State Dispute Settlement, Graphic Health Warnings, the Plain Packaging of Tobacco Products, and the Trans-Pacific Partnership

Investor-State Dispute Settlement (ISDS) poses significant challenges in respect of tobacco control, public health, human rights, and sustainable development. Two landmark ISDS rulings provide procedural and substantive guidance on the interaction between ISDS and tobacco control. The ISDS action by Philip Morris against Uruguay in respect to graphic health warnings raised important procedural and substantive issues. The ISDS matter between Philip Morris and Australia over the plain packaging of tobacco products highlighted matters in respect of abuse of process. In the Trans-Pacific Partnership (TPP), there was a special exclusion for tobacco control measures in respect of ISDS. There was also a larger discussion about the role of general public health exceptions. In the Comprehensive Economic and Trade Agreement (CETA), there was a debate about the application of ISDS to intellectual property rights. In the European Union, there has been discussion of the creation of an international investment court. In the renegotiation of the North American Free Trade Agreement (NAFTA), there has even been calls to abolish ISDS clauses altogether from both Republicans and Democrats. This article concludes there is a need to protect tobacco control measures implementing the WHO Framework Convention on Tobacco Control 2013 from further investor and trade challenges.


I INTRODUCTION
At the beginning of 2017, the United Nations (UN) reported that effective tobacco policies could save 8 million lives and $1.4 USD trillion annually. 1 In 2016, the United States National Cancer Institute (UNCI) and the World Health Organization (WHO) stressed that effective tobacco control policies could save 8 million lives and $1.4 trillion annually. 2 In its study of the economics of tobacco and tobacco control, the leading institutions emphasized the importance of new advances in tobacco control -such as graphic health warnings and plain packaging of tobacco products. 3 The UNCI and the WHO maintain '[i]nformation failures provide an economic rationale for governments to intervene to increase public knowledge about the health harms of tobacco products'. 4 The report provides a further impetus for the implementation of the WHO Framework Convention on Tobacco Control (FCTC). 5 The tobacco industry has used a range of legal measures to challenge tobacco control measures, such as graphic health warnings and plain packaging of tobacco products. The Reuters press agency has published internal documents of Philip Morris -which detail their legal strategies. 6 The tobacco industry mounted an unsuccessful constitutional challenge to Australia's plain packaging of tobacco products in the High Court of Australia. 7 Likewise, there have been failed legal challenges to the introduction of plain packaging of tobacco products in the United Kingdom and France. 8 A number of nations also brought a challenge against Australia's plain packaging of tobacco products in the World Trade Organization (WTO). 9 Australia has always had a strong case in respect of the legitimacy of plain packaging of tobacco products in the WTO. 10 Experts were of the view that tobacco control measures were compatible with the WTO. 11 The media reports have been that this challenge was unsuccessful before the first panel -but there still needs to be official confirmation of the decision. 12 There has been controversy over Big Tobacco using Investor-State Dispute Resolution (ISDS) measures to challenge public health initiatives, such as graphic warnings and the plain packaging of tobacco products. This particular issue is the focus of this paper. The Director-General of WHO, Dr Margaret Chan, has warned of tobacco companies seeking to use investment clauses and trade challenges to undermine the FCTC, '[w]hen one country's resolve falters under the pressure of costly, drawn-out litigation and threats of billiondollar settlements, others with similar intentions are likely to topple as well'. 13 Chan worried about countries being dissuaded from adopting tobacco control measures by Big Tobacco's '... aggressive scare tactics. It is hard for any country to bear the financial burden of this kind of litigation, but most especially so for small countries like Uruguay'. 14 In her view, '[i]t is horrific to think that an industry known for its dirty tricks and dirty laundry could be allowed to trump what is clearly in the public's best interest'. 15 WHO has been worried about the chilling effect of ISDS on public health initiatives. Chan

She concluded '
[i]n my view, something is fundamentally wrong in this world when a corporation can challenge government policies introduced to protect the public from a product that kills '. 17 In this article, I argue that the ISDS system undermines tobacco control, public health, human rights, and sustainable development. Alfred de Zayas has been a critic of the system of ISDS. 18 His 2015 report to the UN Human Rights Council expressed concerns that ISDS arbitration was incompatible with fundamental principles of transparency and accountability. 19 Moreover, the UN Independent Expert raised concerns about adverse human rights, health and environmental impacts of so-called free-trade agreements such as the Trans-Pacific Partnership. In 2016, Alfred de Zayas called on States and Parliaments to ensure that all future trade agreements respect the primacy of human rights. 20 He feared '[i]nvestors and transnational enterprises have invented new rules to suit their needs, rules that impinge on the regulatory space of States and disenfranchise the public'. 21 In addition to a human rights framework, tobacco control can also be seen as part of the Sustainable Development Goals. The Sustainable Development Goals include an item on public health, which calls for governments to 'ensure healthy lives and promote well-being for all at all ages'. 22 Article 3a of the Sustainable Development Goal on Health reads, 'Strengthen implementation of the Framework Convention on Tobacco Control in all countries as appropriate.' 23 WHO has highlighted the tobacco epidemic undermines a number of the global goals of sustainable development. 24 In this context, tobacco is seen as a barrier to sustainable development. There has been concern about the impact of ISDS upon the sustainable development goals. 25 In the context of this policy debate, there has been much discussion about the treatment of public health in light of ISDS. The issue of tobacco control has been a particularly sensitive aspect of this debate. 26 This article considers the recent disputes over tobacco control, ISDS and trade agreements. As a matter of methodology, this piece engages in discourse analysis of legal disputes, public policy papers, and media discussion, and considers the various statements and representations by the stakeholders in the policy discussions. First, it considers the ISDS matter between Philip Morris and Uruguay in respect to graphic health warnings. Second, it explores the ISDS matter between Philip Morris and Australia over the plain packaging of tobacco products. Third, it considers possible approaches for dealing with ISDS, including exclusions, exceptions, and other possible procedural and substantive reforms. This article draws the conclusion that there is a need to protect the FCTC from future investor and trade challenges. 17

II GRAPHIC HEALTH WARNINGS: PHILIP MORRIS V URUGUAY
Graphic health warnings have proven to be an effective nudge in terms of behavioural economics to encourage consumers to avoid tobacco use. 27 Uruguay has been at the forefront of tobacco control in South America. Under the leadership of President Tabaré Vázquez (2005-2010, and 2015 to present) Uruguay has pursued an ambitious public health programme -particularly in respect of tackling smoking and tobacco use. Gustavo Sóñora recalls that Vázquez 'seized the opportunity to make a comprehensive pre-emptive strike against the horrors of smoking -through strong public health policy'. 28 As part of the suite of measures of tobacco control, Uruguay introduced graphic health warnings. Uruguay demanded that tobacco companies increase the size of health warning labels on the front and back of cigarette packs from 50% to 80% of the package. 29 Moreover, Uruguay also passed regulations, preventing tobacco companies from selling different versions of the same brand of cigarettes. Uruguay has been an inspiration for other Latin American countries in respect of tobacco control. 30 Relying upon an investment agreement between Switzerland and Uruguay, Philip Morris used international investment rules to challenge Uruguay's restrictions on cigarette marketing. 31 In particular, the tobacco company has complained about the visceral graphic health warnings being used by the Uruguay Government. 32 Philip Morris protested '[t]he 80 per cent health warning coverage requirement unfairly limits Abal's right to use its legally protected trademarks, and not to promote legitimate health policies'. 33 There has been much academic debate and discussion about the role of charities and philanthropic foundations in the public health space of late. 34 Philanthropists Michael Bloomberg and Bill Gates launched a joint legal fund to assist developing countries in legal battles with the tobacco industry over trade and investment. 35 Bloomberg noted '[w]e are at a critical moment in the global effort to reduce tobacco use, because the significant gains we have seen are at risk of being undermined by the tobacco industry's use of trade agreements and litigation.' 36 Bill Gates maintained '[c]ountry leaders who are trying to protect their citizens from the harms of tobacco should not be deterred by threats of costly legal challenges from huge tobacco companies'. 37 He extolled Australia's leadership in respect of the plain packaging of tobacco products. 38 The Anti-Tobacco Trade Litigation Fund aims 'to combat the tobacco industry's use of international trade agreements to threaten and prevent countries from passing strong tobacco-control laws'. 39 Sue-Lynn Moses has highlighted the importance of the philanthropists' initiative in establishing the Anti-

A Academic Commentary on the Dispute
The dispute raised larger commentary. As Matthew Porterfield and Christopher Byrnes noted: Philip Morris's challenge to Uruguay's tobacco regulations raises a number of fascinating (although not entirely new) issues concerning international investment law, including the scope of fair and equitable treatment, the use of Most Favored Nation (MFN) provisions to invoke more lenient procedural standards, and the availability of injunctive relief in investment arbitration. 41 In 2010, international lawyer and practitioner in investment treaty arbitration Todd Weiler stated: PMI's BIT claim against Uruguay is emblematic of its long standing strategy to vehemently oppose the adoption of measures that might some day lead to plain paper of their products, or other measures that substantially interfere with the use and enjoyment of its crucial investment in its tobacco brands. 42 He added that 'the claim is nothing more than the cynical attempt by a wealthy multinational corporation to make an example of a small country with limited resources to defend against a well-funded international legal action'. 43 Benn McGrady provided a preview of the ramifications of the dispute. 44 He highlighted how a number of issues raised by Philip Morris in respect of graphic health warnings would also have a bearing on plain packaging of tobacco products.
Professor Lawrence Gostin of Georgetown University considered the ISDS action by Philip Morris against Uruguay's graphic health warnings. 45 He maintained that the public health measures were entirely acceptable, especially given that 'research suggests that large and graphic health warnings are effective in reducing tobacco use'. 46 The larger considerations in respect of human rights and the right to health would also help support the use of graphic health warnings by the Uruguayan government. ISDS poses fundamental challenges to tobacco control, public health, human rights, and sustainable development.

B Ruling
In a 2013 decision, the tribunal found that it had jurisdiction to hear the dispute. 47 In October 2015, there were oral hearings on the merits of the case before an ICSID Arbitral Tribunal. The arbitrators included Professor Piero Bernardini of Italy, the international lawyer James Crawford of Australia (a Judge on the International Court of Justice in The Hague) and Gary Born of the USA.
In 2016, Uruguay prevailed in the final ruling in the ISDS conflict with Philip Morris. 48 The 304-page arbitration ruling by Professor Piero Bernardini and Judge James Crawford (including a dissent by Gary Born) is long and complex. The Tribunal ultimately rejected the arguments of Philip Morris. The Tribunal found that Uruguay did not violate its obligations under the Switzerland/Uruguay Bilateral Investment Treaty, or deny the tobacco company any of its protections afforded by that treaty.
The Tribunal found that Uruguay's regulatory measures did not 'expropriate' Philip Morris' property or intellectual property. The Tribunal emphasised that most countries place restrictions on the use of trademarks 'particularly in an industry like tobacco, but also more generally, there must be a reasonable expectation of regulation such that no absolute right to use the trademarks can exist'. 49  [U]nder Uruguayan law or international conventions to which Uruguay is a party the trademark holder does not enjoy an absolute right of use, free of regulation, but only an exclusive right to exclude third parties from the market so that only the trademark holder has the possibility to use the trademark in commerce, subject to the State's regulatory power. 50 In the Tribunal's view, there was 'not even a prima facie case of indirect expropriation by the 80/80 Regulation'. 51 There was also further analysis of the restrictions on variants. The Tribunal also commented '[i]t should be stressed that the SPR and the 80/80 Regulation have been adopted in fulfilment of Uruguay's national and international legal obligations for the protection of public health'. 52 The Tribunal concluded that the challenged measures were a valid exercise by Uruguay of its police powers for the protection of public health, and, as such, they did not constitute an expropriation of Philip Morris' investment.
The Tribunal ruled that the measures did not deny Philip Morris 'fair and equitable treatment'. The majority of the Tribunal was of the view that 'the SPR was a reasonable measure, not an arbitrary, grossly unfair, unjust, discriminatory or a disproportionate measure, and this is especially so considering its relatively minor impact on Abal's business.' 53 Discussing the graphic health warnings, the Tribunal observed that the legislative decision was a response to the strong scientific consensus as to the lethal effects of tobacco -'[s]ubstantial deference is due in that regard to national authorities' decisions as to the measures which should be taken to address an acknowledged and major public health problem'. 54 The Tribunal held '[h]ow a government requires the acknowledged health risks of products, such as tobacco, to be communicated to the persons at risk, is a matter of public policy, to be left to the appreciation of the regulatory authority'. 55 The Tribunal found that the tobacco control measures did not 'unreasonably and discriminatorily' deny Philip Morris the use and enjoyment of its intellectual property rights, such as trademark rights. On the matter of intellectual property, the Tribunal rejected the arguments of the tobacco company that its trademark rights entitled it to block the introduction of graphic health warnings. The Tribunal observed that 'a trademark is not a unique commitment agreed in order to encourage or permit a specific investment'. 56 The Tribunal commented that trademark law was part of the framework of intellectual property laws. 57 The Tribunal commented '[a] trademark gives rise to rights, but their extent, being subject to the applicable law, is liable to changes which may not be excluded by an umbrella clause: if investors want stabilization they have to contract for it '. 58 In conclusion, the Tribunal 'concluded that trademarks are not "commitments" falling within the intended scope of Article 11 of the BIT' (bilateral investment treaty). 59 The Tribunal found 'accordingly, the Claimants' claim of breach by the Respondent of Article 11 by the adoption of the Challenged Measures is rejected'. 60 Moreover, the Tribunal also found by a majority that Uruguay's courts did not 'deny justice' to Philip Morris.
In terms of the costs, the Tribunal ruled that 'each Party shall bear its own costs but the Claimants shall reimburse the Respondent for part of the latter's costs in the amount of US$7 000 000 and, in addition, pay all fees and expenses of the Tribunal and ICSID's administrative fees and expenses'. 61 In respect of the award, the Tribunal decided that the claimants' claims should be dismissed.

C Reactions to the Decision
The ISDS dispute outcome was a disappointment to the tobacco industry, and a relief to the public health community. There remains heated debate over whether there should be fundamental substantive and procedural reforms to the ISDS system.
In the face of the defeat, Marc Firestone, international senior vice president and general counsel of Philip Morris, asserted '[t]he arbitration concerned an important, but unusual, set of facts that called for clarification under international law'. 64 WHO published a press release, noting that the 'international tribunal upholds states' rights to protect health through tobacco control'. 65 The international organisation noted that the Tribunal accepted submission of an amicus brief from the WHO on 'the basis that it provided an independent perspective on the matters in the dispute and contributed expertise from "qualified agencies" '. 66 Uruguayan President Tabaré Vázquez said in a televised speech '[t]he health measures we implemented for controlling tobacco usage and for protecting the health of our people have been expressly recognized as legitimate and also adopted as part of the sovereign power of our republic'. 67 Foley Hoag, the law firm that represented Uruguay, discussed the significance and the importance of the decision. 68 The firm stressed that 'this is a landmark decision because it affirms the sovereign rights not only of Uruguay but of all States to adopt laws and regulations to protect public health by regulating the marketing and distribution of cigarettes and other tobacco products'. 69 Action on Smoking and Health (ASH) applauded Uruguay for winning the case, but said Phillip Morris 'accomplished its primary goal'. 70 Laurent Huber commented that Phillip Morris 'will no doubt shed some public crocodile tears, but their main goal in launching the suit has been realised, six years and millions of dollars have been spent defending a non-discriminatory law that was intended purely to protect public health'. 71 Professor Tania Voon and Professor Andrew Mitchell from the University of Melbourne noted that the tribunal 'provides evidence of investment tribunals' ability to accord appropriate weight to sovereign regulatory objectives'. 72 However, the researchers noted that 'the existence of a partial dissent in that case highlights continuing uncertainties'. 73 Enrico Bonadio from the University of London was hopeful that the decision would make it 'more difficult for tobacco companies to use lawsuits to produce a "chilling effect" and so discourage countries from introducing tobacco control policies'. 74 He opined that 'public health policies pursued by democratically-elected governments should not be overturned by the industry's trademark-based lawsuits, which seem predominantly aimed at scaring policymakers focused on protecting citizens' health'. 75 The McCabe Centre for Law and Cancer has published a longer analysis of the dispute between Philip Morris and Uruguay. 76 The McCabe Centre reflected upon the dispute, '[t]he Tribunal's decision emphasises the policy space that states have under international investment treaties and affirms that it is not the role of international tribunals to second-guess states' regulatory decisions on complex public policy matters'. 77 Cecilia Olivet and Alberto Villareal commented on the ruling: So while Uruguay can celebrate this particular win over a corporate Goliath, perhaps the victory's most useful contribution would be to raise awareness among states of the dangers of signing up to a privatised court system that leaves decisions on public policies in the hands of corporate lawyers. 78 Gustavo Sóñora discussed the significance of the ruling for the introduction of tobacco control measures throughout the region.  81 In the wake of the ruling, Mike Bloomberg has been expanding his philanthropic investments in tobacco control. 82 The ruling will provide encouragement for other nation states to implement graphic health warnings around the world. 83 Uruguay's Minister for Health, Jorge Basso, has indicated on the 25 May 2017 that Uruguay would move to introduce plain packaging of tobacco products because the evidence had shown that such standardised packaging would reduce the incentives for smoking. 84

III PLAIN PACKAGING OF TOBACCO PRODUCTS: PHILIP MORRIS V AUSTRALIA
After a constitutional challenge by Big Tobacco companies, Australia defended the plain packaging of tobacco products scheme in the High Court of Australia. 85 In response to the introduction of plain packaging of products, Philip Morris shifted the shares of its Australian subsidiary to Hong Kong, China. After this corporate restructuring, Philip Morris brought an ISDS arbitration claim under the Australia-Hong Kong Agreement on the Promotion and Protection of Investments 1993. 86 The economist, Peter Martin, noted that the ISDS action 'masks a broader, more serious attempt to turn trade treaties into instruments that allow corporations to sue governments'. 87

A Tribunal Argument
In its notice of claim in 2011, Philip Morris made a number of allegations that Australia's plain packaging of tobacco products contravened the Australia-Hong Kong Agreement on the Promotion and Protection of Investments. 88 First, the tobacco company argued: Plain packaging legislation will result in the expropriation of PM Asia's investments due to the substantial deprivation of the intellectual property and goodwill, the consequent undermining of the economic rationale of its investments and substantial destruction of the value of PM Australia and PML. 89 The company insisted that '[d]irect and indirect expropriation of investments without payment of adequate compensation is contrary to Article 6 of the Hong Kong-Australia BIT'. 90 Second, Philip Morris maintained that the '[p]lain packaging legislation will not be fair and equitable, as is required by the Hong Kong-Australia BIT, given the substantial impairment of PM Asia's investments'. 91 This argument seems to echo the challenge by a number of nations to Australia's plain packaging of tobacco products in the WTO. Philip Morris alleged that 'a failure to afford fair and equitable treatment will contravene Article 2(2) of the Hong Kong-Australia BIT'. 92 Third, Philip Morris contended that: Plain packaging legislation will also constitute an unreasonable impairment to the investments, a failure to afford full protection and security to the investments and a failure to observe obligations in respect of the investments, all in contravention of Article 2(2) of the Hong Kong-Australia BIT. 93 Tyler Mace, assistant general counsel for Philip Morris, asserted: '[p]lain packaging is a government program that takes private property from a legal business'. 94 He intimated that Philip Morris' brands were worth billions of dollars, and the tobacco company was deserving of compensation for the introduction of plain packaging of tobacco products.
In a robust defence of its plain packaging of tobacco products, 95 the Australian Government argued that the implementation of these measures was a legitimate exercise of its regulatory powers to protect the health of its citizens, '[t]he plain packaging legislation forms part of a comprehensive government strategy to reduce smoking rates in Australia'. 96 Australia argued that art 10 of the BIT 'does not confer jurisdiction on an arbitral tribunal to determine pre-existing disputes that have been re-packaged as BIT claims many months after the relevant measure has been announced.' 97 Moreover, Australia argued that, in any case, 'the plain packaging legislation cannot be regarded as a breach of any of the substantive protections under the BIT'. 98 In its view, 'PM Asia made a decision to acquire shares in PM Australia in full knowledge that the decision had been announced by the Australian Government to introduce plain packaging'.

B Academic Commentary
While the matter is being heard, there was a range of academic commentary in respect of the conflict between Philip Morris and Australia in respect of ISDS over plain packaging of tobacco products. Professor Tania Voon and Professor Andrew Mitchell of the University of Melbourne were critical of such claims by the tobacco industry. 100 Dr Kyla Tienhaara from the Australian National University observed '[t]he Philip Morris case perfectly highlights the many problems with investment arbitration, while the purported benefits of the system remain unproven'. 101 Professor Thomas Faunce lamented of investment tribunals, '[s]uch off-shore investment tribunals are not accountable to the Australian populace and have extremely limited capacity to refer to governance arrangements directly endorsed by Australian citizens.' 102 Professor Mark Davison of Monash University provided an extended analysis of the bilateral investment dispute between Australia and Philip Morris Asia. 103 He contended that the ruling of the High Court of Australia had implications for the investment dispute '[w]hile the BIT is a different legal beast from the Australian Constitution, it is difficult to see how a conclusion could be reached that there has been expropriation if that term is interpreted, in essence, as involving an acquisition of property'. 104 Professor Lawrence Gostin of Georgetown University discussed the ISDS action by Philip Morris against Australia's plain packaging of tobacco products. 105 He observed '[m]oreover, given Australia's progressively stricter tobacco regulation over the years, PMA could not have had a legitimate expectation that it would have full use of its trademarks'. 106 In his view, there were substantive grounds to defend plain packaging of tobacco products. ISDS clearly poses a significant threat to the paradigm of public health, human rights, and sustainable development.

C The Ruling
The arbitral tribunal featured as Professor Karl-Heinz Böckstiegel of Germany (as President), Professor Gabrielle Kaufmann-Kohler of Switzerland, and Professor Donald McRae (a Canadian-New Zealand legal scholar based at the University of Ottawa). There was a long-running procedural dispute between Australia and Philip Morris, with a larger number of procedural decisions. In Procedural Order No 8, the Tribunal decided to bifurcate the dispute -with preliminary objections by Australia dealt with in a first phase. Australia had argued that the commencement of the arbitration shortly after the claimant's restructuring constituted an abuse of rights.
On 18 December 2015, the arbitration tribunal issued a unanimous decision, finding that the Tribunal has no jurisdiction to hear Philip Morris Asia's claim. 107 On 17 May 2016, the Tribunal published the decision (albeit with the parties' confidential information redacted). 108 The Tribunal found that Philip Morris Asia's claim was an abuse of process and an abuse of rights. The tribunal was concerned that Philip Morris Asia acquired an Australian subsidiary, Philip Morris (Australia) Ltd, for the purpose of initiating arbitration under the Hong Kong Agreement challenging Australia's tobacco plain packaging laws.
The arbitral tribunal provides a historical recounting of the passage of plain packaging of tobacco products under the Australian Labor Party governments of Prime Ministers Kevin Rudd and Julia Gillard. The Tribunal notes the influential work of the National Preventative Health Taskforce, and its recommendation that the Australian Government implement the plain packaging of tobacco products. The Tribunal provides legislative history of the development of plain packaging of tobacco products.
By comparison, the arbitral tribunal considered the relationship between Philip Morris' corporate restructuring and the plan to introduce plain packaging measures. The timeline highlighted the close proximity of the policy development of plain packaging of tobacco products, and the decision to restructure the company. Significantly, the arbitral tribunal noted '[l]ess than a week after the share transfer on 23 February 2011, the Claimant, continuing its preparations for the present arbitration, made inquiries for the purposes of instructing additional counsel'. 109 On the question of control, the Tribunal found: [T]hat, while some (limited) management activity was exercised by PM Asia from Hong Kong prior to the 2011 restructuring, Mr Pellegrini acted in most relevant circumstances as a manager of PMI, rather than PM Asia, and that all significant strategic and budgetary decisions were either taken by or at least had to be approved by PMI. 110 As a result, the Tribunal concluded 'that the Claimant, who bears the burden of proof on this issue, has failed to show that, prior to the 2011 restructuring, it had "control" with a "substantial interest" over the Australian investments in the sense of the definition in Article 1(e) of the BIT'. 111 The Tribunal held that 'the initiation of a treaty-based investor-State arbitration constitutes an abuse of rights (or an abuse of process, the rights abused being procedural in nature) when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time when a specific dispute was foreseeable'. 112 The Tribunal was of 'the opinion that a dispute is foreseeable when there is a reasonable prospect, as stated by the Tidewater tribunal, that a measure which may give rise to a treaty claim will materialise'. 113 In its Award on Jurisdiction and Admissibility, the Tribunal upheld Australia's objection about abuse of rights. In its conclusion, the Tribunal concluded that 'the commencement of treaty-based investor-State arbitration constitutes an abuse of right (or abuse of process) when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable'. 114 In its view, '[a] dispute is foreseeable when there is a reasonable prospect that a measure that may give rise to a treaty claim will materialise'. 115 The Tribunal elaborated that the adoption of plain packaging of tobacco products in Australia was foreseeable well before the decision to restructure was taken and then implemented, '[o]n 29 April 2010, Australia's Prime Minister Kevin Rudd and Health Minister Nicola Roxon unequivocally announced the Government's intention to introduce Plain Packaging Measures'. 116 The Tribunal also commented that its conclusion was reinforced by a review of the evidence regarding the reasons for the corporate restructuring, '[t]he record indeed shows that the principal, if not sole, purpose of the restructuring was to gain protection under the Treaty in respect of the very measures that form the subject matter of the present arbitration'. 117 The Tribunal found that 'the adoption of the Plain Packaging Measures was not only foreseeable but actually foreseen by the Claimant when it chose to change its corporate structure'. 118 The Tribunal concluded that: [T]he initiation of this arbitration constitutes an abuse of rights, as the corporate restructuring by which the Claimant acquired the Australian subsidiaries occurred at a time when there was a reasonable prospect that the dispute would materialise and as it was carried out for the principal, if not sole, purpose of gaining Treaty protection. 119 The Tribunal ruled that 'the claims raised in this arbitration are inadmissible and the Tribunal is precluded from exercising jurisdiction over this dispute '. 120 In July 2017, the Tribunal ordered Philip Morris to pay back the legal costs of the Australian Government in the ISDS dispute. 121 According to media reports, this sum was up to $50 million. 122 However, the text of the ruling was heavily redacted. The fair trade organisation AFTINET has argued that there should be full transparency in relation to Australia's costs in respect of the ISDS dispute. 123

D Reactions to the Decision
There were an array of political, legal, and public policy responses to the decision in respect of Australia's plain packaging of tobacco products under the ISDS system. Welcoming the decision, the then Deputy Leader of the Nationals and then Minister for Rural Health, Fiona Nash, commented '[t]he Coalition government has powered ahead with plain packaging and invested in reducing smoking rates across the board'. 124 Labor's Health spokeswoman, Catherine King, has paid tribute to the Labor politicians who brought in the laws '[t]his is a great vindication of the work by (former Labor Attorney-General) Nicola Roxon and Tanya Plibersek to promote world leading health'. 125 The Australian Greens' Trade spokesman Senator Peter Whish-Wilson reflected upon the significance of the dispute. 126 He was concerned that Australia remained vulnerable because it had agreed to ISDS mechanisms in free-trade agreements with China and Korea. 127 He concluded, 'ISDS is the Damocles Sword hanging over Australia's sovereignty and our right to legislate in the public interest'. 128 South Australian Senator Nick Xenophon was concerned about the high costs involved in defending the ISDS action by Philip Morris. 129 He was also dissatisfied that Australia's Health Department did not want to reveal its costs in the dispute.
Dr Kyla Tienhaara said that the decision was good news for the Australian Government. 130 Professor Tania Voon from Melbourne Law School has warned of the danger of further investor disputes against the Australian Government. 131 Glyn Moody commented that, just because Australia won its plain packaging case against Philip Morris does not mean that corporate sovereignty is not a threat. 132 Lori Wallach observed that 'Australians saw more than $50 million of their tax dollars go to legal costs to defend against the attack'. 133 Professor Tania Voon and Professor Andrew Mitchell from the University of Melbourne commented on the outcome, 'Australia's win on jurisdiction offered a political boost to countries implementing or considering standardized tobacco packaging, but the circumstances of Philip Morris' investment in Australia may not be mirrored elsewhere '. 134 There was also commentary on the delays and costs involved in the ISDS matter. 135 IV TOBACCO CONTROL, ISDS, THE TRANS-PACIFIC PARTNERSHIP, AND REGIONAL TRADE AGREEMENTS There has been a crisis of legitimacy in respect of the ISDS regime. 136 In response to the ISDS disputes, there have been a number of policy options to address the issue of tobacco control. As Professor Andrew Mitchell notes, '[t]he ability of governments to impose measures regulating health-related goods and the consequent effects on intellectual property create distinct challenges for international investment law'. 137 There have been a number of discernible positions in this debate. Global law firms and the investment arbitration community have argued for the further growth and expansion of ISDS. Some have called for procedural reforms in respect of ISDS. Others maintain that there is a need for substantive reforms of the ISDS -particularly in respect of healthcare and tobacco control. Critics of ISDS have called for the abolition of the system altogether. Deborah Sy has provided a useful map of the options of full exclusions, partial exclusions, specific exceptions, and general exceptions. 138 The Trans-Pacific Partnership (TPP) created an ISDS exclusion in relation to tobacco control measures. 139 A number of other agreements seek to deal with the issue through general public health exceptions in ISDS. While the USA has departed the TPP negotiations under President Trump, the agreement is still being pursued by the remaining 11 countries. 140 The Comprehensive Economic and Trade Partnership (CETA) sought to limit the circumstances in which intellectual property owners could invoke ISDS. 141 There has also been a proposal for the development of an Investment Court mooted by the European Union. There are also a number of public policy makers who have argued that ISDS should be abolished altogether in discussions over the revision of the North American Free Trade Agreement (NAFTA). 142

A The TPP and Tobacco Control Exclusions
The TPP is a regional agreement, spanning the Pacific Rim. 143 A centrepiece of the TPP is ch 9 of the agreement, which establishes an ISDS. 144 One of the most contentious issues was the question of tobacco control and ISDS. In light of actions by Philip Morris against Uruguay's graphic health warnings and Australia's plain packaging of tobacco products, there have been legitimate fears that the ISDS regime could be used to disrupt public health initiatives. In light of the ISDS matters involving Australia and Uruguay, there was fierce debate over the treatment of tobacco control in the TPP.
There was aggressive lobbying by industry groups during the period of the negotiations of the TPP. 145 Philip Morris has been a strong supporter of the inclusion of an ISDS regime in the TPP. 146 Under such a mechanism, Philip Morris would be able to challenge government regulations under the TPP -much like they have done so in disputes with Australia and Uruguay. In the end, the final text of the TPP deals with tobacco control in quite a minimalist way. The US Trade Representative notes that the TPP gives 'each Party the right to decide that its tobacco control measures for manufactured tobacco products cannot be challenged by private investors under [ISDS]'. 147 Article 29.5 of the TPP provides: A Party may elect to deny the benefits of Section B of Chapter 9 (Investment) with respect to claims challenging a tobacco control measure of the Party. Such a claim shall not be submitted to arbitration under Section B of Chapter 9 (Investment) if a Party has made such an election. If a Party has not elected to deny benefits with respect to such claims by the time of the submission of such a claim to arbitration under Section B of Chapter 9 (Investment), a Party may elect to deny benefits during the proceedings. For greater certainty, if a Party elects to deny benefits with respect to such claims, any such claim shall be dismissed. 148 Footnote 12 provides '[f]or greater certainty, this Article does not prejudice: (i) the operation of Article 9.14 (Denial of Benefits); or (ii) a Party's rights under Chapter 28 (Dispute Settlement) in relation to a tobacco control measure'. 149 Footnote 13 provides a definition of a tobacco control measure. 150 Reading this text, it seems that only limited protection is afforded to tobacco control in respect of investor-state dispute settlement (if parties elect to use such protection). There is still scope for country-tocountry disputes over tobacco control under ch 28 of the TPP. The text does not provide for an overarching recognition of the primacy and the significance of the FCTC.
Katherine Shats at the O'Neill Institute for National and Global Health Control provided a commentary upon the text on tobacco control in the TPP. 151 She noted: '[t]his kind of tobacco-specific carve-out is certainly unprecedented in the history of trade and investment agreements and sets a strong precedent for tobacco control and public health'. 152 Nonetheless, she questioned whether the text was adequate, sufficient, and comprehensive. 153 Shats highlights the prospect of state-to-state disputes over tobacco control under the TPP 'convincing and funding a government to file a lawsuit on their behalf is something Big Tobacco is very good at'. 154 Robert Ireland also considered the significance of the tobacco carve-out in the TPP. 155 He suggested that it would be a precedent, which would be applied in other jurisdictions and contexts. Ted Alcorn has also discussed trade-offs for public health under the TPP in The Lancet. 156 He praised the explicit exemption of tobacco products from the ISDS regime. Scott Sinclair that 'the TPP tobacco exception is a positive step for tobacco control regulation that makes it harder for multinational tobacco firms to make an ISDS claim'. 157 However, he observes that the specific carve-out for tobacco highlights the broader threats posed by ISDS and the TPP, '[t]he very need for such a tobacco carve-out recognizes that ISDS poses a threat to health regulation'. 158 This raises questions about whether other fields of public health will be exposed to ISDS claims. 159 Australia has said that it will avail itself of the protection for tobacco control against investor-state dispute settlement under the TPP. 160 Clearly, other remaining participants in the TPP should do likewise. Under the leadership of Justin Trudeau, the Government of Canada is considering the adoption of plain packaging of tobacco products. 161 Scott Sinclair has recommended '[i]f the TPP comes into effect, Canada should certainly take advantage of this opt-out to protect future plain packaging regulation'. 162 Australia also included a similar clause on tobacco control in an updated trade agreement with Singapore. 163 Article 22 of this updated agreement provides, in the section on Investor-State Dispute Settlement, that 'no claim may be brought under this Section in respect of a tobacco control measure of a Party'. 164

B The TPP and General Exceptions
There has been significant discussion about the use of general exceptions to address the protection of public health. Professor Julien Chaisse has explored the confines of domestic health protections under international investment law. 165 Section B of ch 9 of the TPP establishes the mechanism for ISDS. 166 Annex 9.B deals with the nature of expropriation. Clause 3(b) provides that '[n]on-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute indirect expropriations, except in rare circumstances'. 167 Chapter 29 of the TPP provides for general exceptions. 168 There is further language here on environmental measures necessary to protect human, animal or plant life, or health.
There has been significant debate about the efficacy about such general exceptions in respect of health in the context of ISDS in the TPP. Professor Peter Yu has commented that such safeguards are a limited, initial step. 169 He has maintained that there should be additional, complementary reforms. Professor Tania Voon and Professor Andrew Mitchell from the University of Melbourne have commented, '[t]he use of general exceptions covering objectives such as health or the environment may provide additional comfort to regulating states, but such exceptions do not preclude significant financial and personnel costs in successfully defending measures'. 170 Arbitration lawyer George Kahale III has commented that the provisions have loopholes, which leave nation states wide open to ISDS actions. 171 He argued that the system was so badly flawed that it should be abolished, and started again from the beginning. It remains to be seen whether there will be further revisions to the ISDS regime -especially as new Prime Minister Jacinda Ardern's New Zealand Government has promised to reconsider the TPP and propose amendments. 172 A number of other trade agreements, such as the Korea-Australia Free Trade Agreement 2014 and the China-Australia Free Trade Agreement 2015, rely just on exceptions to deal with public health matters. 173 Australia's Productivity Commission has called for a new open and transparent approach for the negotiation of trade agreements, involving intellectual property rights. 174 The Productivity Commission has repeatedly warned successive Australian Governments against the inclusion of ISDS regimes in trade agreements. 175 The Productivity Commission has stressed '[i]n relation specifically to ISDS provisions, the government should seek to avoid accepting provisions in trade agreements that confer additional substantive or procedural rights on foreign investors over and above those already provided by the Australian legal system'. 176 There has been a larger debate over the procedural and substantive architecture of ISDS in the Asia-Pacific. 177

C The Comprehensive Economic and Trade Partnership (CETA)
There has been much controversy over ISDS in the trade negotiations between Canada and the European Union in the CETA. 178 The Government of Canada was particularly disturbed by the action brought by Eli Lilly under an ISDS mechanism under the NAFTA over the rejection of drug patents. On the 17th March 2017, a Tribunal issued its award in the ISDS matter between Eli Lilly and Canada under NAFTA. 179 Eli Lilly had objected to the rejection of key drug patents in Canada. The Tribunal unanimously dismissed Eli Lilly's claims and confirmed that Canada was in compliance with its NAFTA obligations. The decision will no doubt be significant in considerations about the interaction between intellectual property, investment, and public health.
In the final revisions of CETA, the new Trudeau Government sought to refine the ISDS system. 180 Then Canadian Trade Minister Chrystia Freeland and European Commissioner for Trade Cecilia Malmström commented on the changes: With these modifications, Canada and the EU will … move to a permanent, transparent and institutionalized dispute-settlement tribunal; revise the process for the selection of tribunal members, who will adjudicate investor claims; set out more detailed commitments on ethics for all tribunal members; and agree to an appeal system. 181 As a result of the revisions, CETA has important text limiting the circumstances in which ISDS can be invoked in matters concerning intellectual property. For instance, art 8.12.5 notes that expropriation does not apply to the issuance of compulsory licensing. 182 Article 8.12.6 provides '[f]or greater certainty, the revocation, limitation or creation of intellectual property rights, to the extent that these measures are consistent with the TRIPS Agreement and Chapter Twenty (Intellectual Property), do not constitute expropriation'. 183 Article 8.12.6 provides '[m]oreover, a determination that these measures are inconsistent with the TRIPS Agreement or Chapter Twenty (Intellectual Property) does not establish an Expropriation'. 184 The European Commission and the Canadian Government have been working together on a proposal to establish a multilateral investment court in order to restore faith in the ISDS system. 185 It remains to be seen whether this proposal will be realised and be effective. D NAFTA 2.0 In addition to pulling the USA out of the TPP negotiations, the new US President Donald Trump has demanded revisions of NAFTA. 186 The new US Trade Representative Robert Lighthizer has questioned the need for ISDS, saying: It's always odd to me when the business people come around and say, 'Oh, we just want our investments protected.' … I mean, don't we all? I would love to have my investments guaranteed. But unfortunately, it doesn't work that way in the market… You either are in the market, or you're not in the market. 187 Nobel Laureate Joseph Stiglitz, Professor Jeffrey Sachs and two hundred other law and economics Professors have urged President Trump to remove ISDS from NAFTA. 188 On the progressive side of politics, Senator Elizabeth Warren of the Democrats has called for the removal of ISDS clauses 'ISDS provides a huge handout to global corporations while undermining American sovereignty'. 189 It remains to be seen whether the ISDS regime will be retained in the NAFTA, and if so, what form that will take.

V CONCLUSION
The ISDS actions by Philip Morris against Uruguay and Australia have raised complex questions about the intersection of international trade, investment law, intellectual property, and public health. There was a great concern that such actions served to have a chilling effect on public policy development. ISDS poses significant challenges in respect of tobacco control, public health, human rights, and sustainable development.
In the wake of Big Tobacco's failed investor actions against Uruguay and Australia, there has been a new hope that graphic health warnings and plain packaging of tobacco products will be adopted by other nations and countries around the globe. There is a need for consideration of public policy options for the treatment of tobacco control measures under ISDS in regional trade agreements, such as TPP, CETA, and NAFTA 2.0.
At the end of her term as Director-General in 2016, Dr Margaret Chan reflected upon the battles with the tobacco industry in respect of public health policy. 190 She was heartened by the international support for the FCTC, '[t]he treaty is already one of the most widely embraced in UN history'. 191 She was hopeful that the tide of tobacco use was shifting '[f]rom Uruguay to Australia, countries large and small have stood up to the tobacco industry by implementing plain packaging and large pictorial health warning labels'. 192 Chan noted '[w]here tobacco companies have tried to threaten and bully nations, governments have responded with firm measures to protect public health'. 193 Chan trusted that national governments would adopt a range of tobacco control measures. 194 She was 'heartened by progress on standardised or "plain" packaging -a measure introduced by the treaty and pioneered in Australia, where smoking rates have now fallen to record lows'. 195 She stressed '[t]he early evidence from Australia shows that plain packaging, as part of a comprehensive approach to tobacco control, is diminishing the appeal of tobacco products, increasing the effectiveness of health warnings and reducing the ability of the pack to mislead'. 196 Chan noted that 'France and the UK have begun implementing plain packaging laws, and New Zealand and Hungary have recently passed legislation' and 'many other countries are close behind'. 197 Much will depend on the ability of her successor Dr Tedros Adhanom Ghebreyesus in carrying the work of WHO in respect of tobacco control.
As Chan has noted, it is imperative that national governments, seeking to protect public health of their citizens, are not handcuffed by investment clauses. 198 The implementation of the FCTC should not be frozen and chilled by the use of investor clauses and mega-trade agreements. There is a need to ensure that ISDS clauses do not undermine tobacco control, public health, human rights, and sustainable development.