RYOT

Global tobacco firm Philip Morris said it is suing the Australian government after parliament passed a new law requiring all cigarettes to be sold in plain packages.

"We are left with no option," Philip Morris Asia (PMA) spokesperson Anne Edwards said.

"The government has passed this legislation despite being unable to demonstrate that it will be effective at reducing smoking and has ignored the widespread concerns raised in Australia and internationally regarding the serious legal issues associated with plain packaging."

Under the ground-breaking law, all tobacco products sold in Australia must be in plain packaging from December 1, 2012. The law demands all cigarettes be sold in drab olive-brown packets with large, graphic health warnings.

The government hailed the passage of the law as "one of the most momentous public health measures in Australia's history" and called on the big tobacco companies to accept the will of the parliament.

Hong Kong-based PMA said it was seeking to suspend the legislation and seek substantial compensation for the loss of the company's valuable trademarks and investments in Australia under a bilateral investment treaty with Hong Kong.

The company expects damages to amount to billions of dollars and that the legal process will take two to three years.

"We are confident that our legal arguments are very strong and that we will ultimately win this case," Edwards said.

PMA's Australian affiliate Philip Morris Limited (PML) also intends to pursue claims under domestic law before the High Court of Australia, according to the statement.

British American Tobacco Australia said earlier this month it would launch a challenge in the High Court as soon as the laws were granted royal assent.

The company will argue it is unconstitutional for the government to remove its trademarks and other intellectual property without compensation.