The Australian government has posted a response to the Philip Morris notice of arbitration in the Plain Packaging BIT claim. In addition to a brief discussion of substantive issues, Australia has offered some jurisdictional arguments:
29. The Australian Government objects to the jurisdiction of the arbitral tribunal (by way of a preliminary objection). This objection follows inevitably from PM Asia's acquisition of shares in PM Australia subsequent to the announcement of the decision to introduce plain packaging legislation and PM Asia's artificial invocation of a dispute by reference to the BIT.
30. PM Asia had no interest in PM Australia prior to 23 February 2011. It follows that PM Asia did not have an "investment" in PM Australia (and, it would inevitably follow, PML or assets held by PML) at the time that the introduction of the plain packaging measures was announced on 29 April 2010, and nor did it have an"investmenf' in the ensuing months when a dispute developed over plain packaging. PM Asia only acquired its interest in PM Australia on 23 February 2011, some 10 months after the governmental announcement in relation to plain packaging and after a dispute had already arisen in relation to plain packaging.
31. In such circumstances, there could be no "investmenf' for the purposes of Article 10 of the BIT and any reliance on Article 10 of the BIT would constitute an abuse of right. It follows that the arbitral tribunal lacks jurisdiction or that the claims that PM Asia now seeks to bring under the BIT are inadmissible.
32. As a separate matter, the Australian Government notes that, under Article 1(e) ofthe BIT, "investments" are only protected inter alia to the extent that they are"admitted" by the relevant Contracting Party "subject to its law and investment policies applicable from time to time". It will be for PM Asia to seek to establish that each of the investments on which it relies (i) is "owned or controlled" by PM Asia within the meaning of Article 1(e) of the BIT, and (ii) has been admitted inaccordance with Article 1(e) of the BIT.
33. A further separate matter is that PM Asia's claim is heavily dependent on, and seeks to invoke breaches of, a series of treaties over which an arbitral tribunal established under Article 10 of the BIT could have no jurisdiction. Thus, PM Asia asserts that the plain packaging legislation is in breach of Australia's obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (''TRIPS Agreement"), the WTO Agreement on Technical Barriers to Trade (''TBT Agreement"), and the Paris Convention for the Protection of Industrial Property ("Paris Convention"). It is said that breach of such obligations in turn amounts to a breach of Article 2(2) of the BIT.
34. Such claims are plainly outside the scope of protection of the BIT, whether as a matter of the fair and equitable treatment standard established under Article 2(2) or the "umbrella clause" in Article 2(2), which provides that each Contracting Party to the BIT has an obligation to "observe any obligation it may have entered into with regard to investments of investors of the other Contracting Party".
35. Even if it were correct (which it is not) that Article 2(2) could somehow be understood as extending an arbitral tribunal's jurisdiction to obligations owed by Australia to other States under various multilateral treaties, the treaties that PM Asia seeks to invoke all contain their own dispute settlement mechanisms. It is not the function of a dispute settlement provision such as that contained at Article 1a of the BIT to establish a roving jurisdiction that would enable a BIT tribunal to make a broad series of determinations that would potentially conflict with the determinations of the agreed dispute settlement bodies under the nominated multilateral treaties. This is all the more so in circumstances where such bodies enjoy exclusive jurisdiction.
36. The Australian Government will request that jurisdictional objections be heard in a preliminary phase of the proceedings, subsequent to service of a Statement of Claim by PM Asia and in advance of any merits phase. The jurisdictional objections outlined above are not intended to be exhaustive, and the Australian Government reserves its rights to develop and formulate objections as it sees fit once it has seen PM Asia's Statement of Claim.
