England and Wales Court of Appeal (Civil Division)
* United Kingdom
National case details
Registration ID: C1/2016/2607,2624,2612 and 2614
Instance: Appellate on fact and law
Case status: Final
Area of law
Relevant principles applied
Identification of the case
- Right to property (art. 17 CFREU)
- Health care (art. 35 CFREU)
- The Standardised Packaging of Tobacco Products Regulations 2015
- Children and Families Act 2014
- European Communities Act 1972
- Directive 2014/40/EU (the Tobacco Products Directive or "TPD", but generally referred to in the appeals as "TPD2" because it replaces a 2001 directive on the subject)
- Articles 17, 35 and 52(1) of the Charter of Fundamental Rights of the European Union
- Articles 1(2), 9, 15, 42 and 51 of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark
- Articles 2(1), 2(2), 3(1)(e), 4(2) 9, 34, 36, 114, 114(4), 168(1), 207(1) and 207(6) of the TFEU
Summary of the case
The appeal links four different appeal cases coming from tobacco companies challenging The Standardised Packaging of Tobacco Products Regulations 2015 ("the Regulations") implemented by the Secretary of State. The Regulations partially implement EU Directive 2014/40/EU (Tobacco Products Directive/TPD2). However, the UK Regulations are stricter, adding additional restrictions on tobacco packaging. The appellants challenged these additional measures rather than the content of TPD2. Overall, the Regulations seek to standardise the material, shape, opening and content of the packaging of cigarettes and also place similar controls on rolling your own tobacco. The Regulations include prohibitions on tobacco labelling, concerning the permitted text and content, and prescribe mandatory design elements to be placed on the packaging. According to the Government, the Regulations pursue the objectives of “improving public health by suppressing the prevalence and use of tobacco.” Moreover, the Regulations strive to “reduce smoking to the maximum degree” complementing other educational, social, fiscal and economic strategies which attempt to reduce smoking in line with the WHO’s endorsement of States adopting “comprehensive anti-smoking policies.” The appellants are divided into two groups depending on their production and the arguments they bring forward: the ‘Tobacco Appellants’ and the ‘Tipping Appellants.’ All of the arguments were brought forward by the ‘Tobacco Appellants’ except for the final issue, which is specifically the Tipping Appellants’ concern.
The tobacco companies claimed the Regulations are in breach of A1P1 (Article 1 Protocol 1) and Article 17 of the Charter as they disproportionately deprive them of their property, specifically their trademarks without compensation. In relation to proportionality, the companies claimed that the measures taken pursuant to the Regulations would fail to meet the objective of improving public health and thus could not be either “suitable and appropriate” or “necessary.” Further, the companies contended that the measures did not strike a fair balance between public interest and the companies’ private property rights and were thus disproportionate.
The companies further argued that the UK Regulations were in breach of Article 24(2) of the TPD2 because they failed to take into account “the high level of protection of human health achieved through this Directive.”
They also appealed their point questioning whether the UK Secretary of State had erred in the consultation process by giving little weight to expert evidence brought forward by the tobacco companies.
It was further argued that Article 24(2) of the TPD2 read together with Article 36 TFEU required that the additional measures under the Regulations required the Secretary of State to rely on proper comparative evidence in order to prove that these measures will achieve a higher level of health protection than that achieved by TPD2.
Lastly, the appellants who produce paper for the filter tips of cigarettes (‘Tipping Appellants’) argued specifically against Regulation 5 which restricts the colour and branding of cigarettes. They claimed that this Regulation was ultra vires as it was not permitted by Article 24(2) of the TPD2. Further they claimed that this Regulation was not justified on public health grounds and was disproportionate.
Dismissal of the appeals.
The Court dismissed the applicant’s appeals and upheld the prior conclusions of the judge.
In relation to the alleged conflict of the Regulations with A1P1, the Appeal Court found that the judge was entitled to conclude that the Regulations strike a fair balance between the public interest pursued - the protection of public health - and the private property rights affected.
In relation to Article 17 of the Charter, the Appeal Court also upheld the prior finding by the judge that the question of whether a restriction complies with the Charter is resolved by an assessment of proportionality in the context of the objectives pursued by the impugned measure, the importance of the rights that they affect, and the extent of the interference. The applicants attempted to argue that Article 17 goes further than A1P1 to protect the right to property given that the right to compensation is absolute in the case of deprivation. However, the Court relied on Joined Cases C-120/06 P and C-121/06 P (FIAMM SpA v Council of the European Union) rejecting that compensation was required, and found that the Charter adds nothing material in this respect to the issue of proportionality under A1P1. Thus, the Regulations were also found to be in compliance with the Charter.
In response to the claim that the Regulations were in breach of Article 24(2) of the TPD2 the Appeal Court found that this article imposes partially harmonising measures of the UK and that the Directive explicitly states that it "does not affect" the right of a Member State to introduce further measures standardising the packaging of cigarettes where this is justified on grounds of public health. The Appeal Court found that the Regulations relating to plain packaging fall squarely within Article 24(2) and therefore within the competence of the UK.
In relation to the contention that the judge erred by applying the wrong test to the empirical data generated in Australia on standardised tobacco packaging and did not adequately resolve the dispute between the parties on this matter. The Appeal Court disagreed and found the judge’s application of the evidence to be compatible with the general approach of the court in judicial review. In this context, the Court relied on CJEU case law in finding that the national court was not required to go so far as to resolve disputes between technical experts. Moreover, the Court was satisfied that on the findings he made in relation to that evidence and the expert evidence as a whole, the judge was entitled to conclude that the Secretary of State had discharged the burden of proof.
The Court rejected the argument that the Article 24(2) of the TPD2 requires relevant comparative evidence to ensure that the additional measures taken by the Regulations will achieve a higher level of health protection than that achieved by TPD2. The Court held that Article 24(2) expressly preserves the right of a Member State to maintain or introduce further requirements to those in TPD2 provided they are justified on grounds of public health, are proportionate, and "take account of" the high level of protection of human health achieved through TPD2.
In relation to the arguments put forward by the Tipping Appellants the Court found that there was sufficient material before the judge and taken into account by him, to justify his conclusion that there were reasonable grounds for believing that there will be a beneficial effect on public health as a result of implementing the entire range of measures including the restrictions on tipping paper.
Role of the Charter and role of the general principles on enforcement
This case relied on the Charter particularly in relation to the question of proportionality. The applicants claimed that the UK Regulations would fail to meet the objective of improving public health and therefore could not be appropriate or necessary and that the measures imposed by the Regulations failed to strike a fair balance between the public interest and the private property rights of the tobacco companies. These claims were made in relation inter alia to Article 17 of the Charter. Article 52(1) of the Charter was used by the Court when ensuring that any limitation on the right respected ‘the essence of the right.’ Lastly, in balancing the rights in question the Court agreed that the economic interests of the tobacco companies were secondary to the protection of human health recognised in Article 35 of the Charter.
Article 17 of the Charter and the Additional Protocol 1 were brought in by the parties proprio motu as they alleged interference with their fundamental right of property. The parties also attempted to invoke Article 16 of the Charter but it was not pursued by the Court. The Court accepted that Article 17 protects intellectual property but held that the nature of these rights could not be changed by virtue of these rights. Put differently, the rights conferred by a trade mark are negative rights and the Court noted that these could not be made into positive rights. The Court noted that Article 17 of the Charter includes the provision that the use of property may be regulated by law in so far as is necessary for the general interest. Further, it relied on CJEU case law to explain that Article 17 does not require the payment of compensation.
Lastly, when assessing proportionality the Court relied on Article 35 of the Charter in declaring that that the economic interests of tobacco companies were secondary to the protection of human health.
In relation to A1P1 and the provision of compensation the Court declared that a control of use of a product must be sufficiently severe in order for compensation to be awarded. The main question which must be asked is whether ‘compensation required in order to achieve a "fair balance" between the public interest pursued and the private property interests affected?.’ The Court found that a fair balance was struck and thus that the provision of compensation was not necessary under A1P1.
The principle of effectiveness was relied upon in order to determine whether there were equally effective but less restrictive measures available which would achieve the objective of protecting public health. The Appeal Court agreed with the judge’s finding that objectively, Parliament acted reasonably in concluding that there was no equally effective less restrictive measure which met the aims and objectives of standardised packaging. To substantiate its finding that the principle of effectiveness was relied on correctly by the Secretary of State, the Court relied on the opinion of Advocate General Kokott in Philip Morris who invoked the precautionary principle in cases where there is no scientific uncertainty about the health risks presented by metholated tobacco products but there was uncertainty as to how a prohibition of menthol cigarettes would affect consumer habits. Overall, the Appeal Court agreed with the judge that based on the principle of effectiveness and the precautionary principle there were no less restrictive and equally effective measures which could have been employed by the UK Secretary of State and that the measures taken in this respect were effective to achieve the protection of public health.
While the Court did not explicitly refer to the principle of dissuasiveness, the principle implicitly runs throughout. The measures imposed by the Regulations which were upheld and considered proportional by the Court have the effect of deterring smoking in order to improve public health. In this context, the principle serves as the underlying basis for the legally justified measures in this case.
The principle of proportionality is relied on extensively throughout the judgment. The challenge to the judge's conclusion on the general issue of proportionality failed and the Appeal Court agreed with the finding of the lower Court in respect to the proportionality of the measure. The applicants challenged the prior conclusion that the Regulations were proportional on several grounds, including wrong application of the precautionary principle by the judge, that the margin of appreciation led him to substantive error and that there were ‘less restrictive alternatives’ available which the judge failed to take into account. Another ground challenging the proportionality principle was that the judge applied the wrong test to the empirical data generated in Australia on standardised tobacco packaging. The parties claim the dispute regarding the interpretation and use of the data was not adequately resolved by the judge. The Appeal Court disagreed and found the judge’s application of the evidence to be compatible with the general approach of the court in judicial review. In this context, the Court relied on CJEU case law in finding that the national court was not required to go so far as to resolve disputes between technical experts.
The Court invoked the CJEU Scotch Whiskey judgment in order to delineate the principles to be applied by a national court when examining national legislation in light of a public health justification. In this context, the Court found that it must determine the relevance of the evidence adduced by the competent national authorities in order to determine whether the legislation can be said to be compatible with the principle of proportionality.
In relation to appropriateness, it was found that the qualitative and quantitative up-to-date evidence provided by the Secretary of State during the litigation and the margin of appreciation awarded to Parliament resulted in the measure being appropriate to achieve the desired aim.
In relation to necessity and fair balance the Court agreed that objectively, Parliament acted reasonably in concluding that there was no equally effective less restrictive measure which met the aims and objectives of standardised packaging. Thus, it was found that the fair balance test leads, overwhelmingly, to the conclusion that the Regulations are justified and proportionate in the public interest.
Elements of judicial dialogue
- Dialogue among same level national courts within the same Member State
- Direct dialogue between CJEU/ECtHR and National court (out of preliminary reference procedure)
- Dialogue between high court - lower instance court at national level
- Judgment of the Court (Second Chamber) of 4 May 2016 Case C-547/14 Philip Morris Brands SARL and Others v Secretary of State for Health
- Judgment of the Court (First Chamber) of 18 June 2009 Case C-487/07 L'Oréal SA v Bellure NV
- Judgment of the Court (Second Chamber) of 23 December 2015 Case C-333/14 Scotch Whisky Association v Lord Advocate
- Judgment of the Court (First Chamber) of 22 September 2011 Case C-323/09 Interflora Inc v Marks & Spencer plc
- Judgement of the Court of 12 November 2002 Case C-206/01 Arsenal Football Club plc v Reed
- Judgment of the Court (First Chamber) of 19 October 2016 Case C-148/15 Deutsche Parkinson Vereinigung eV v Zentrale zur Bekämpfung unlauteren Wettbewerbs eV
- Judgment of the Court (Second Chamber) of 23 December 2015 Case C-333/14 Scotch Whisky Association v Lord Advocate
To delineate, outline or reiterate the exact scope of legal principles. Judicial dialogue was also used to specify certain technical points, for example, in relation to the application of registration of the design of products the Court relied on another case of the England and Wales Court of Appeal to stress that the indication of the product to which the design is to be applied does not alter the scope of the protection. In other words, if you register a textile design in order to protect it, this also has the effect of preventing that design being used on a tshirt or wallpaper for example.
UK Regulations will not be altered by the judgment considering that the appeals were dismissed and the original judgment upheld.
Additional notes on the decision
All of the appeals on the challenges to the UK Regulations were dismissed meaning there was no impact or change to domestic legislation/policy directly stemming from this case.