By Agencies

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Australia's highest court has upheld tough new anti-tobacco marketing laws, dismissing a legal challenge from global cigarette companies in a major test case between tobacco giants and anti-smoking campaigners.

Leading global tobacco manufacturers, including British American Tobacco, Britain's Imperial Tobacco, Philip Morris and Japan Tobacco, had challenged the law, claiming the rules were unconstitutional because they effectively extinguished their intellectual property rights.

In a brief statement on Wednesday, the High Court said a majority of its seven judges believed the laws did not breach Australia's constitution. A full judgment will be released later today.

The decision means cigarettes and tobacco products must be sold in plain olive green packets without branding from December. The plain packages will also carry graphic health warnings.

'Still a bad law'

The laws are in line with World Health Organisation recommendations and are being watched closely by Britain, Norway, New Zealand, Canada and India, who are considering similar measures to help fight smoking.

The decision is a blow to tobacco companies and ends any domestic Australian challenges to plain packaging. All political parties in Australia support the plain packaging laws and there is little hope a future government would overturn the laws.

"It's still a bad law that will only benefit organised crime groups which sell illegal tobacco on our streets," Scott McIntyre, the BAT Australia spokesperson, said after the decision.

"Even though we believe the government has taken our property from us, we'll ensure our products comply with the
plain packaging requirements and implementation dates."

Industry analysts are worried plain packaging laws could spread to emerging markets like Brazil, Russia and Indonesia and threaten sales growth. The court's decision was welcomed by anti-smoking groups.

"We hope other nations follow Australia's lead and eliminate the use of tobacco packaging as a marketing tool, to help reduce the global tobacco death toll - which is on track to reach half a billion people this century," Ian Oliver, Australia's Cancer Council chief executive, said.

The plain packaging rules do, however, still face a number of challenges under global trade rules.

WTO challenges

Australia is already fighting trade complaints in the World Trade Organisation (WTO) from Ukraine, Honduras and the Dominican Republic, who claim the laws unfairly restrict trade, although their trade with Australia is negligible.

Tobacco companies have also signalled a potential challenge under a bilateral Australia-Hong Kong investment agreement.

Companies could also use a proposed new Trans Pacific Partnership (TPP) trade deal to mount a further challenge if the
TPP agreement includes controversial investor-state dispute settlement provisions.

Australia has strongly opposed lobbying by big business to include investor-state dispute settlement provisions in the TPP because that would undermine the ability of a government to pass domestic laws.

The plain packaging laws have been strongly supported by Nicola Roxon, Australia's attorney-general, who was previously health minister and whose father was a smoker who died of esophageal cancer when she was 10.

Australia wants to cut the number of smokers from around 15 per cent of the population to 10 per cent by 2018.

Authorities say smoking kills around 15,000 Australians a year.

The World Health Organisation estimates more than one billion people around the world are regular smokers, with 80 per cent in low and middle income countries.