Sydney - Global tobacco firms lost a "watershed" court challenge to Australia's plain packaging laws for cigarettes on Wednesday in a closely-watched case health advocates said will have a worldwide impact.
The High Court of Australia ruled the measures, forcing cigarettes and tobacco products to be sold in drab, uniform packaging with graphic health warnings from December 1 this year, did not breach the country's constitution.
Four companies led by British American Tobacco [JSE:BTI] (BAT) had challenged the law, claiming it infringed their intellectual property rights by banning brands and trademarks from packets, and was unconstitutional.
But the court dismissed the move by BAT, Japan Tobacco International, Imperial Tobacco and Philip Morris, rejecting their argument that the law represented "an acquisition of (their) property otherwise than on just terms".
"At least a majority of the court is of the opinion that the Act is not contrary to (Australia's constitution)," the court said in a brief notice of judgment.
The court's full reasons will be delivered at a later date, and the tobacco firms were ordered to pay the government's legal costs.
They cannot appeal further in the Australian legal system.
Canberra estimates there are 15 000 deaths nationally each year from tobacco-related illnesses and that smoking costs more than Aus$30bn (US$31.4bn) a year in healthcare and lost productivity.
Attorney-General Nicola Roxon said the court win was "a victory for all those families who have lost someone to a tobacco related illness".
"This is a watershed moment for tobacco control around the world," she said in a statement. "Australia's actions are being closely watched by governments around the world. Other countries might now consider their next steps.
"Today should be a clarion call to every country grappling with the costs and harm of tobacco and hopefully encourage them to take the next tobacco control steps appropriate for them," she added.
Other countries mulling similar moves include Britain, Canada and New Zealand, while Roxon said China, South Africa and the European Union were also watching developments closely.
She said the message to the rest of the world was that "big tobacco can be taken on and beaten".
BAT said it would respect the "bad law", but warned it would cause black-market cigarette sales to skyrocket as the packaging would be easy to fake and so "only benefit organised crime groups".
Philip Morris noted that a number of other legal challenges had been launched, including a case in Hong Kong alleging the law breached Australia's bilateral investment treaty with Hong Kong.
"The legality of plain packaging, including whether Australia will have to pay substantial compensation to Philip Morris Asia, remains at issue and will be considered in other ongoing legal challenges," said Philip Morris spokesman Chris Argent.
Australia is also facing formal complaints at the World Trade Organisation over the plan from countries including Honduras, Ukraine and the Dominican Republic.
Philip Morris said Wednesday's decision would have "no legal bearing on these international cases or on other jurisdictions".
"We believe that Philip Morris Asia's investment treaty case and the WTO challenges are strong," Argent said.
"As such, there is still a long way to go before all the legal questions about plain packaging are fully explored and answered."
Fin24 on Facebook,
Twitter and Google+.