Ag Kokott Rejects Challenges To The Validity Of The Tobacco Products Directive – Implications For Standardised Packaging Legislation Inwards The Fellow Member States?

Jonathan Griffiths, Reader inwards Intellectual Property Law, Queen Mary University of London

The Tobacco Products Directive (Directive 2014/40/EU, revising Directive 2001/37/EC) imposes stringent controls on the marketing of tobacco products. It introduces, inter alia, a requirement for cigarettes in addition to hand-rolling tobacco to send to a greater extent than prominent moving-picture present in addition to text wellness warning, farther regulatory controls on the marketing of tobacco products (including e-cigarettes) in addition to a prohibition on the marketing of tobacco products with “characterising flavours” (including menthol cigarettes).

On 23^rd December, Advocate General Kokott delivered her Opinions inwards iii cases concerning the validity of diverse provisions of the Directive. In (C-358/14) Republic of Poland v Parliament &Council, Poland seeks annulment of the Union-wide prohibition on menthol cigarettes. Both other cases are requests for a preliminary ruling made inwards judicial review proceedings past times the High Court of England in addition to Wales. (C-477/14) Pillbox 38 (UK) Ltd was referred inwards a illustration concerning the domestic implementation of the Directive’s rules concerning e-cigarettes. In the national proceedings inwards (C-547/14) Philip Morris Brands SARL, in a challenge described past times the Advocate General every bit “a form of full general onslaught”, tobacco companies telephone phone into interrogation the domestic implementation of several of the Directive’s provisions. In all iii Opinions, the Advocate General advises the Court comprehensively to turn down the challenges to the Directive’s validity.

This blogpost focuses on the Opinion inwards Philip Morris Brands SARL. It outlines the Advocate General’s conclusions on the diverse questions referred past times the High Court in addition to so displace on to reverberate on that Opinion’s potential implications for electrical flow disputes concerning the introduction of legislation requiring fully standardised packaging for tobacco products past times exactly about Member States (notably, the United Kingdom, Republic of Ireland in addition to France).

(C-547/14) Philip Morris Brands SARL

Phillip Morris (and British American Tobacco) (“the tobacco companies”) brought a claim for judicial review against the Secretary of State for Health, seeking to forestall the implementation of the Directive.  They challenge the Directive on a variety of grounds. They claim, first, that Art 114 does non render an adequate legal footing for several provisions of the Directive. Secondly, they debate that the Directive violates the regulation of proportionality, especially when viewed inwards the lite of the Union legislature’s obligation to honour their telephone commutation rights nether the European Union Charter of Fundamental Rights. Thirdly, they debate that the Directive improperly delegates sure powers to the Commission and, every bit a result, violates Arts 290 in addition to 291 TFEU. Finally, they claim that the Directive breached the regulation of subsidiarity.

While the Secretary of State considers the Directive to live valid, he took the stance that the Court of Justice had exclusive jurisdiction to assess its validity. In such circumstances, the High Court simply referred a listing of questions concerning the companies’ challenge to the Court of Justice for a preliminary ruling.

Admissibility

Palpably irritated past times exactly about aspects of the reference, Advocate General Kokott advised the Court that, inwards her view, several of the referred questions are inadmissible. Influenza A virus subtype H5N1 number of the referred questions concern the companies’ challenges to those provisions of the Directive which render latitude for Member States to adopt to a greater extent than stringent national tobacco command measures than those set out nether the Directive (including “standardised packaging” nether Art 24(2)). In the absence of the actual adoption of whatsoever national measures, the Advocate General considered that, such questions are hypothetical. [37]-[43]. Secondly, several of the referred questions relate to powers delegated to the Commission nether the Directive. However, the proceedings earlier the national courtroom concern only the United Kingdom’s intention in addition to duty to implement the Directive in addition to hence whatsoever questions concerning the Commission’s role are also inadmissible at this stage. [44]-[47]. Thirdly, the national courtroom had raised sure questions nearly the compatibility of the Directive with the regulation of subsidiarity. However, the nature of whatsoever such alleged incompatibility was non explained at an adequate flat of special in addition to such questions were therefore, salvage inwards i limited respect, also inadmissible. [48]-[51]. Despite the fact that the Advocate General considered these referred questions to live inadmissible, she went on to render her views on their essence inwards the alternative (see below).

Even where admissible, the referred questions did non escape criticism. The Advocate General was especially concerned that the High Court had mostly provided a real limited description of the relevant arguments relating to the questions referred [32]-[34]. In effect, the national courtroom appears to receive got had done petty to a greater extent than than pick out the text of the tobacco companies’ challenge without making whatsoever pregnant endeavour to come upwardly to its ain stance on the diverse questions. In noting that the companies’ claims were “reasonably arguable”, the national courtroom had done the “absolute minimum” necessary to homecoming the remaining questions admissible [21]-[30].

Art 114 TFEU every bit legal footing for provisions of the Directive

In a well-established formula, the Advocate General initially noted that recourse to Article 114 TFEU every bit the legal footing for Directive 2014/40 could non live called into interrogation simply because, inwards improver to improving the functioning of the internal marketplace for tobacco in addition to related products, the Directive also pursued a high flat of wellness protection every bit a goal. [56] She so went on to assess each challenge nether Art 114 TFEU inwards turn. They focused on provisions of the Directive which (i) prohibit the marketing of tobacco products with a characterising season (Art 7); (ii) regulate the labelling in addition to packaging of tobacco products (Arts 8-16);  (iii) grant Member States liberty to innovate farther standardisation of the packaging of tobacco products (Art 24(2)) in addition to to prohibit sure categories of tobacco production for reasons relating to the specific province of affairs inwards a Member State (Art 24(3)); (iv) give Member States the choice to prohibit cross-border distance sales of tobacco products to consumers (Art 18(1)); in addition to (v) authorise the Commission to implement sure internationally agreed standards on a continuing footing (Arts 3(4) & 4(5)).

The Advocate General considered that, if these provisions are interpreted appropriately, Art 114 TFEU provides an adequate legal footing for the Union legislature’s activity. Relevant electrical flow in addition to time to come obstacles to merchandise be in addition to the contested provisions volition improve the functioning of the internal market. Undoubtedly, where tobacco products are prohibited, the Directive is non capable of improving the functioning of the internal marketplace for those products. However, it is recognised inwards the Court’s jurisprudence that Article 114 TFEU grants the Union legislature the ability to prohibit the placing on the marketplace of a sure production if this helps to improve trading weather condition for a grade of other products [54]-[144].

Proportionality

In the national judicial review proceedings, the tobacco companies challenged the proportionality of 2 aspects of the Directive - the prohibition on the marketing of tobacco products with characterising flavours in addition to the regulation of the labelling in addition to packaging of such products. In accordance with established jurisprudence, the Advocate General noted that the regulation of proportionality:

“..requires that acts of the European Union institutions live appropriate for attaining the legitimate objectives pursued past times the legislation at number in addition to create non become beyond what is necessary inwards monastic tell to accomplish those objectives;… when in that location is a pick betwixt several appropriate measures, recourse must live had to the to the lowest degree onerous, in addition to the disadvantages caused must non live disproportionate to the aims pursued…” [146]

In assessing proportionality, the Court is obliged to receive got telephone commutation rights into line of piece of job concern human relationship wherever relevant.

In the national court, the tobacco companies claimed that many of the contested provisions of the Directive interfere disproportionately with their liberty to behave a line of piece of job concern (Art 16, European Union Charter). In examining these claims, the Advocate General noted that the Union legislature has a broad discretion to interfere with the correct to behave a line of piece of job concern where it acts inwards an area, such every bit that of tobacco control, which involves political, economical in addition to social choices in addition to inwards which it is called upon to undertake complex assessments in addition to evaluations. This was especially so where the Union legislature acted to accomplish a high flat of wellness protection inwards the European internal market. In such circumstances, legislative activity volition only live invalid if it is evidently inappropriate for attaining the legitimate objectives pursued, goes evidently beyond what is necessary to accomplish those objectives or entails disadvantages which are evidently disproportionate to its objectives. [149]-[150]

In this light, in addition to inwards stance of the precautionary regulation [155]-[160], the Advocate General did non consider that the contested measures constitute a disproportionate interference with the tobacco companies’ liberty to behave a business. Influenza A virus subtype H5N1 number of less intrusive agency of satisfying the legislature’s wellness goals had been suggested past times the tobacco companies. These included the imposition of historic menstruum limits on the sale of cigarettes with characterising flavours in addition to the launching of data campaigns nearly the dangers of tobacco products. However, inwards the Advocate General’s view, these would clearly live less effective than the measures adopted nether the Directive. In considering proportionality inwards the strict sense, she acknowledged that the contested provisions would receive got an adverse economical impact on exactly about undertakings. However, she noted that transitional periods were available nether the Directive and, inwards whatsoever event:

“It should live borne inwards mind…that the protection of human wellness has considerably greater importance inwards the value arrangement nether European Union police delineate than such essentially economical interests (see Articles 9 TFEU, 114(3) TFEU in addition to 168(1) TFEU in addition to the minute judgement of Article 35 of the Charter of Fundamental Rights), with the outcome that wellness protection may justify fifty-fifty substantial negative economical consequences for sure economical operators.” [179][204]

This beingness so, the contested provisions did non interfere disproportionately with the companies’ liberty to behave a business. 

The national courtroom also referred a interrogation concerning the proportionality of Art 13 of the Directive with the tobacco companies’ correct of liberty of aspect nether Art eleven of the Charter. Art xiii prohibits elements of labelling on the packaging of tobacco products that give rising to a number of specified effects, including those that (i) promote a tobacco production or encourage its consumption past times creating an erroneous impression nearly its characteristics, wellness effects, risks or emissions; (ii) those that suggest that a special tobacco production is less harmful than others or aims to cut the effect of exactly about harmful components of fume or has vitalising, energetic, healing, rejuvenating, natural, organic properties or has other wellness or lifestyle benefits in addition to (iii) those that suggest economical advantage. The Advocate General interpreted this provision every bit prohibiting both truthful in addition to imitation statements on production packaging where those statements, viewed objectively, are capable of producing i or to a greater extent than of the designated effects:

“An ‘organic cigarette’ is soundless a production that is extremely harmful to health. Information on the production packaging should non suggest fifty-fifty to consumers who are aware of the wellness risks of smoking — fifty-fifty exactly subconsciously — that it is desirable for them or beneficial to the surroundings to fume ‘organic cigarettes’. In addition, whatsoever miserable conscience on the part of smokers on line of piece of job concern human relationship of the wellness risks associated with the consumption of tobacco products should non live appeased past times the fact they are doing something skillful for themselves or for the planet past times turning to ‘organic cigarettes’ rather than conventional cigarettes.” [222]

Nevertheless, fifty-fifty when interpreted expansively inwards this way, Art xiii does non constitute a disproportionate interference with the tobacco companies’ correct of liberty of expression. The Union legislature has less liberty of manoeuvre inwards restricting liberty of aspect than it has inwards interfering with the correct to behave a business. The European Court of Human Rights has for exactly about fourth dimension subjected restrictions to commercial communications to a detailed proportionality research in addition to the Court of Justice should create likewise. However, according to the Advocate General, the constraints imposed past times Article 13(1) were non disproportionate to the wellness protection objectives pursued, especially every bit the products at number entail considerable wellness risks [211]- [237].

Improper delegation of powers to the Commission

Under Art 290(1) TFEU, the Union legislature may delegate the ability to adopt non-legislative acts of full general application to supplement or amend a basic legislative deed to the Commission and, nether Art 291TFEU, the legislature may delegate the ability to adopt measures that implement legislation to the Commission. The referring courtroom asked whether, inwards passing provisions of the Directive, the Union legislature had exceeded the limits of these powers of delegation; inwards particular, because a number of the powers delegated were either legislative inwards nature or were unreasonably vague. The Advocate General considered whatsoever such criticisms to live ill-founded [238]-[269].

The regulation of subsidiarity

Under the regulation of subsidiarity, every bit enshrined inwards Art 5(1) TEU inwards conjunction with Article 5(3) TEU, inwards areas which create non autumn inside its exclusive competence, the Union may deed only if in addition to inwards so far every bit the objectives of the proposed activeness cannot live sufficiently achieved past times the Member States, but tin rather, past times ground of the scale or effects of the proposed action, live improve achieved at Union flat [271]. As noted above, inwards large part, the questions referred past times the national courtroom on the application of the subsidiarity regulation were considered to live inadmissible past times the Advocate General because they had non been presented inwards sufficient detail. The only admissible interrogation on subsidiarity was given brusque shrift past times the Advocate General, who was strongly of the stance that activeness to command tobacco products with characterising flavours could non live achieved at national flat in addition to that the Directive’s objectives inwards this regard could live improve achieved at Union level.

In improver to this challenge on substance, the national courtroom had asked whether the Union legislature had provided an adequate declaration of reasons for the Directive inwards the lite of the regulation of subsidiarity, suggesting that the legislature had simply asserted compliance with the regulation of subsidiarity inwards a formulaic manner. That beingness the case, a interrogation arose every bit to whether the Directive was vitiated past times a defective declaration of reasons. In considering this question, the Advocate General noted that:

“Where compliance with the regulation of subsidiarity is nether examination, it must live clear from the declaration of reasons for the European Union stair out whether the Union legislature gave sufficient consideration to questions relevant to the regulation of subsidiarity and, if so, what conclusions it reached with regard to subsidiarity.” 

She agreed that Recital lx of the Directive was an “empty formula”. However, this did non necessarily hateful that the stair out was invalid because aspects relevant to the number of subsidiarity were also to live found inwards other recitals, fifty-fifty if those recitals create non themselves build limited reference to the regulation of subsidiarity . Furthermore, it was non necessary for the justification for a Union stair out inwards the confront of the regulation of proportionality to live completely evident inwards the contested legislative stair out itself. Here, for example, justification for the Union’s legislative activeness could live found inwards the Explanatory Memorandum for the Commission’s Proposal for a Directive and inwards the comprehensive preparatory piece of job past times the Commission staff inwards connection with the impact assessment for the Directive. As a result, the legislative institutions had adequate cloth on which to base of operations their evaluation of compliance with the regulation of subsidiarity [270]-[301]. Nevertheless, according to the Advocate General:

“...it is strongly advisable that inwards time to come the Union legislature avoids set formulas similar the i contained inwards recital lx inwards the preamble to the Directive in addition to instead enhances the preamble to the European Union stair out inwards interrogation with sufficiently substantial statements regarding the regulation of subsidiarity which are tailored to the measures inwards question. [301]

Implications for measure packaging legislation inwards the Member States

If the Court follows Advocate General Kokott’s guidance, the most controversial provisions of the Tobacco Products Directive volition comprehensively withstand the tobacco industry’s “general onslaught”. However, the industry’s legal challenge to tobacco command legislation inwards Europe volition for certain non halt there. As explained above, Art 24(2) of the Directive provides that:

“This Directive shall non touching the correct of a Member State to keep or innovate farther requirements, applicable to all products placed on its market, inwards relation to the standardisation of the packaging of tobacco products, where it is justified on grounds of world health, taking into line of piece of job concern human relationship the high flat of protection of human wellness achieved through this Directive. Such measures shall live proportionate in addition to may non constitute a agency of arbitrary discrimination or a disguised restriction on merchandise betwixt Member States...”

The Great Britain in addition to Republic of Ireland receive got already taken wages of this liberty to enact comprehensive standardised packaging legislation (see the Standardised Packaging of Tobacco Products Regulations2015 and the Public Health (Standardised Packaging of Tobacco) Act 2015 respectively). French Republic has committed to follow suit.

Under such laws, tobacco products must live sold inwards drab-coloured packaging without whatsoever branding other than a written indication of the build in addition to variant nether which the production is sold. While the UK in addition to Irish Gaelic provisions are non set to come upwardly into forcefulness until May, they receive got already been challenged past times the tobacco manufacture inwards judicial review proceedings. In the United Kingdom, the High Court heard the industry’s challenge inwards Dec in addition to judgment is expected soon. The manufacture argues, alongside other things, that the domestic legislation interferes with the regulation of liberty of movement of goods, breaches European merchandise grade police delineate in addition to violates a number of their telephone commutation rights.

(C-547/14) Philip Morris Brands SARL does non concern Member State standardised packaging legislation and, indeed, every bit nosotros receive got seen, the national court’s questions on the validity of Art 24(2) receive got been considered inadmissibly hypothetical. Nevertheless, if endorsed past times the Court, the views of the Advocate General may receive got of import implications for the outcome of the domestic challenges to the legality of the UK in addition to Irish Gaelic legislation.

National courtroom non simply to refer tobacco companies’ challenges without attempting to hit its ain view

The tobacco manufacture has deep pockets in addition to resists tobacco command measures past times all agency possible. In the domestic proceedings inwards (C-547/14) Philip Morris Brands SARL, the manufacture clearly threw the kitchen sink at the Directive. In such circumstances, it is mayhap non surprising that the domestic gauge largely satisfied himself with establishing that the claims were arguable earlier passing them swiftly on to the Court of Justice. Nevertheless, the Advocate General’s strongly-worded criticism must become far to a greater extent than probable that the High Court gauge currently considering the challenge to the UK’s standardised packaging regulations volition endeavour resolve the industry’s multiple claims himself rather than simply referring them to the Court.

Free movement of goods

In (C-547/14) Philip Morris Brands SARL, the tobacco companies suggested that Art 24(2) could non properly live based on Article 114 TFEU because it allows Member States to undermine the costless movement of goods past times introducing to a greater extent than stringent rules than those set downwards at Union level. As has been indicated above, the national court’s interrogation on this number was considered inadmissible. Nevertheless, inwards the alternative, the Advocate General suggested that Art 114 TFEU provided an appropriate legal footing for Art 24(2). Properly interpreted, this provision permitted Member States to adopt “further requirements” only inwards so far every bit the Union legislature itself has non carried out harmonisation. As such, Art 24(2) simply made it clear that the Directive was only partially harmonising. [105]-[120]. On this basis, the Advocate General indicated that it ought to live possible for Member States to innovate fully standardised packaging legislation at national level:

“…[T]he Member States stay free, inwards particular, to lay downwards their ain requirements every bit to colours of all parts of the packaging which are non reserved for warnings, extending every bit far every bit the standardisation of packaging….Colouring is regulated — indirectly — inwards the Directive at most inwards so far every bit Article 13 prohibits tobacco products beingness given a misleading or deceptively positive presentation.” [113]

Such national legislation would, of course, innovate novel obstacles to merchandise in addition to the interrogation of proportionality would live crucial inwards determining whether the interference with the regulation of costless movement of goods which they create tin live justified. Again, on this issue, the Advocate General’s Opinion offers interesting insight.

Proportionality in addition to telephone commutation rights

Formally at least, the proportionality of national legislation must, live examined against a stricter measure than that applied mostly past times the Advocate General inwards (C-547/14) Philip Morris Brands SARL (“manifest disproportionality”). There are also differences inwards the factual in addition to policy contexts of the 2 disputes. Nevertheless, in that location are many indications inwards the Opinion that suggest that, inwards principle, national standardised packaging legislation volition live on review for compatibility with the proportionality regulation inwards Union law.

Logically, a Member State legislature ought also to create goodness from discretion to legislate inwards an area, such every bit tobacco control, which involves political, economical in addition to social choices in addition to inwards which complex assessments in addition to evaluations must live undertaken in addition to the “precautionary principle” ought to apply where national legislation aims to accomplish of import world wellness objectives against a background of scientific evidence that is, to exactly about degree, uncertain. More particularly, however, the Advocate General’s Opinion indicates considerable scepticism nearly exactly about of the arguments upon which the manufacture has relied heavily inwards the judicial review of the standardised packaging regulations inwards the United Kingdom.

She was clearly non persuaded past times claims that an alleged increase inwards the merchandise inwards counterfeit tobacco products resulting from standardised packaging legislation renders such legislation disproportionate. [84]-[85]; [182]. Perhaps fifty-fifty to a greater extent than importantly, she rejected, with exactly about disdain, the declaration that standardised packaging legislation volition live ineffective inwards dissuading people (and especially immature people) from smoking; noting that plainer packaging volition take away exactly about of the “coolness or fun factor that may live associated with odd or especially striking packaging in addition to the curiosity that may live inherent inwards novel or odd packaging…” [191].

Conclusion – the role of telephone commutation rights

In lobbying on, in addition to litigating against, standardised packaging legislation, the tobacco manufacture has placed considerable reliance on its telephone commutation rights. However, the Opinion inwards (C-547/14) Philip Morris Brands SARL suggests that the presentation of its arguments inside the framework of the Charter is unlikely to receive got a conclusive impact on the outcome of its challenge to standardised packaging legislation. The correct to behave a line of piece of job concern is clearly real readily outweighed inwards Blue Planet involvement and, fifty-fifty if the restriction of the industry’s correct to apply its merchandise marks is framed every bit an interference with belongings nether Art 17 of the Charter, petty pregnant departure would look to live made to the assessment of proportionality inwards this instance (see (C-477/14) Pillbox 38 (UK) Ltd [194]-[201]). Even arguments based upon the to a greater extent than rigid correct of liberty of aspect are unlikely to prevail. Ultimately (and mayhap unsurprisingly), all such claims confront the same obstacle. In the Advocate General’s words:      

“Certainly, the standardisation of the shape, size in addition to minimum content of cigarette packets brought nearly past times the Directive agency a loss of diversity, marketing opportunities in addition to competitive potential for manufacturers of tobacco products. However, the purely economical involvement inwards the greatest possible inter-product in addition to inter-brand rival must live secondary to the protection of human health, which, every bit has already been stated, has considerably greater importance inwards the value arrangement nether European Union law…” [193]-[204].

This, however, is non the only interesting dot to live made nearly the Union’s telephone commutation rights framework. More generally, in that location are also a yoke of features of the Opinion which betoken that the Court’s jurisprudence on the application of the Charter may non yet live fully established. First, piece the Advocate General referred to the correct to wellness attention protected nether Art 35 of the Charter every bit designating a world involvement of real high importance, she did non examine the legitimacy of the diverse contested provisions past times reference to the demand to flora a “fair balance” betwixt competing rights of equivalent status. Instead, she sought strictly to create upwardly one's hear the proportionality of the Union legislature’s interference with the tobacco companies’ protected rights. This approach powerfulness receive got been employed every bit a outcome of the trend inwards which the national courtroom had referred its questions. However, inwards other cases, the Court has employed a “fair balance” framework in addition to this variety of approach indicates a pregnant ambiguity at the pump of its telephone commutation rights jurisprudence.

Another interesting characteristic of the Opinion relates to the concept of the “essence” of protected telephone commutation rights. Under Art 52(1):

Any limitation on the practise of the rights in addition to freedoms recognised past times this Charter must…respect the essence of those rights in addition to freedoms.

  

In this context, “essence” appears to betoken an irreducible minimum of protection. However, the exact business office of this concept has yet to live explained clearly past times the Court. This uncertainty seems apparent inwards the Opinion. Following a thorough assessment of the proportionality of the Directive’s interference with the correct of liberty of expression, the Advocate General provides only the next briefest of afterthoughts:

“The essence of liberty of aspect (first judgement of Article 52(1) of the Charter of Fundamental Rights) is likewise non affected if commercial communications past times undertakings which are intended alone to promote sales are restricted past times an European Union legislative act” [236].

The lack of farther explanation hither mayhap i time again indicates exactly about other aspect of the Court’s telephone commutation rights jurisprudence awaiting farther elaboration.

Barnard & Peers: chapter 5, chapter 11, chapter 12

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