The first international Investor-State Dispute Settlement (ISDS) decision involving Australia was handed down in The Hague on Monday. Having decided in Australia's favour in this landmark case, the Tribunal issued detailed reasons for its decision on Philip Morris Asia's challenge to Australia's tobacco plain packaging legislation. Rejecting the Philip Morris application, the Tribunal stated that it constituted an 'abuse of rights'. This was because Phillip Morris had moved control of its Australian operations to Hong Kong at a time when the dispute over tobacco plain packaging was a 'reasonable prospect' and the principal, if not sole, purpose of the move. The Tribunal ruled that the move was so that the Australia-Hong Kong bilateral investment agreement would potentially apply to its operations, giving Phillip Morris access to bring an investor-State claim.
The Tribunal's decision has been posted on the website of the Permanent Court of Arbitration. This decision makes it clear that jurisdiction shopping by corporations in order to seek access to ISDS procedures will be subject to close scrutiny.