Maintenance and champerty

by John Quiggin on August 17, 2012

Those are the marvellous names for the old common law offences/torts involved in persuading others to engage in a lawsuit for your own benefit (feel free to state more precisely, IANAL).  They’ve mostly been abolished now, which is probably a good thing in terms of alllowing class actions and similar, and they’ve never applied (AFAIK) in international law.

Nevertheless, a reminder of the reason such laws existed has come with the announcement of a WTO complaint by Ukraine against Australia’s plain packaging laws for cigarettes.

These laws have just been upheld by the High Court, against claims that they represented a “taking” of “intellectual property”, in the form of cigarette brands. Not only is this a great result in substantive terms, but (although reasons have yet to be released) it clearly represents a rejection of extreme claims about property rights in general and IP in particular.

Coming back to the Ukraine case, tobacco trade between Ukraine and Oz is zero, and, AFAICT, the main involvement of the Ukraine in the tobacco industry is that the number of smoking-related deaths is particularly high there.

As no one even bothers to deny, this action has been ginned up by Big Tobacco in a shameless piece of champerty. Actually, it’s a good thing – the WTO is a political court, and it would be suicidal to uphold such a blatant attack on public health. In the process, it may set some precedents that will make future interference with public health laws more difficult.

Still, this is a direct attack by the tobacco companies on Australia’s national sovereignty, and deserves a response. Perhaps we should be looking at a special profits tax on tobacco companies.

{ 31 comments }

1

P O'Neill 08.17.12 at 11:45 pm

Note that Ukraine has been making a nuisance of itself in WTO matters recently prior to this, seeking to keep the mighty trade juggernauts of Yemen and Laos out of the organization. So there may some issue of batty trade policy types in Kiev in addition to whatever they’re up to on behalf of Tobacco in this case.

2

indian 08.18.12 at 1:15 am

You. an’t get Davidoffs down-under? Shame.

3

JP Stormcrow 08.18.12 at 2:42 am

This reminds me of US-Thailand in 1989 . As I recall C. Everett Koop (Surgeon General under Reagan) spoke out against the United States’ position (and probably not coincidental that it was filed a few months after he left office):

The United States insisted that the Thai import restrictions constituted arbitrary or unjustifiable discrimination, or disguised restrictions on international trade — abuses of the Article XX health exception for protectionist purposes. The GATT panel concluded in favor of the United States. It noted that Thailand did not restrict domestic production and sales of cigarettes, and found that Thailand’s ban was not “necessary” because other, non-discriminatory measures were available to control the quantity and quality of cigarettes for public health reasons. Prompted by this panel report, Thailand entered into an agreement with the United States whereby foreign cigarettes can now be imported freely into Thailand and will be accorded national, non-discriminatory treatment.

Thailand’s Tobacco Act effectively prohibited the importation and sale of foreign cigarettes in Thailand except on the very restricted duty-free market. Thai legislation also banned cigarette advertising, required health warnings on all cigarette packets and banned cigarette production and investment in tobacco cultivation in neighboring Indo-Chinese countries.

4

JP Stormcrow 08.18.12 at 2:44 am

5

Matt 08.18.12 at 3:53 am

As presented this is a bit odd. Suppose that Ukraine brings this case and wins. What can it get? It gets an order that says that if Australia doesn’t remove the non-tariff barrier to trade (I assume that’s what this is claimed to be) then Ukraine can impose retaliatory sanctions equal to an amount that it loses through the action. But if there is no trade in cigarettes between Ukraine and Australia, then the amount will be nominal. If Australia imposes its requirements equally on all brands of cigarettes, then it’s unlikely to be found to be a non-tariff barrier to trade anyway. Perhaps the point is just a nuisance suit, but from what’s described above, it seems unlikely to have an important impact.

6

Tim Worstall 08.18.12 at 9:21 am

Having gone and looked it up (for it is most assuredly weird) it seems that Ukraine’s complaints are all under TRIPS.

Which was a bloody stupid agreement in the first place.

7

ogmb 08.18.12 at 1:39 pm

1. “this action has been ginned up by Big Tobacco in a shameless piece of champerty.”

Isn’t it Ukraine who’s committing the champerty here?

2. “Still, this is a direct attack by the tobacco companies on Australia’s national sovereignty”

Now tobacco companies are an easy target, but just how far does this national sovereignty go? Can Australia create a law that requires all cars must look the same, be painted drab olive, and carry the slogan “This machine kills pedestrians” in dayglo orange?

3. [Matt:] “If Australia imposes its requirements equally on all brands of cigarettes, then it’s unlikely to be found to be a non-tariff barrier to trade anyway.”

Does that also hold if they impose restrictions on all brands of French champagne?

8

JP Stormcrow 08.18.12 at 2:23 pm

it seems that Ukraine’s complaints are all under TRIPS.

Hmm, according to this WTO site the dispute involves:

Articles 1, 1.1, 2.1, 3.1, 15, 16, 20 and 27 of the TRIPS Agreement;
Article 2.1 and 2.2 of the TBT Agreement; and
Article III:4 of the GATT 1994.

9

JP Stormcrow 08.18.12 at 2:37 pm

An AP article I read described Ukraine as a “tobacco-growing country”, so i thought maybe they joined on general principle of protecting their tobacco industry. But no, per this map from the “tobacco atlas” they have a miniscule amount of land devoted to tobacco-growing (120 hectares, much smaller neighbor Moldava has 2,500).

10

Salient 08.18.12 at 3:10 pm

1. “this action has been ginned up by Big Tobacco in a shameless piece of champerty.”

Isn’t it Ukraine who’s committing the champerty here?

Ukraine is committing barratry (filing a frivolous lawsuit) and Big Tobacco is committing champerty (encouraging a frivolous lawsuit in the hopes of profiting from it). It’s an indirect form of champerty in this case — the more commonplace example is more like, a lawyer advertising on TV that if your disability claim is denied, you should hire them and sue/appeal [US].

Now tobacco companies are an easy target, but just how far does this national sovereignty go? Can Australia create a law that requires all cars must look the same, be painted drab olive, and carry the slogan “This machine kills pedestrians” in dayglo orange?

Why you’d paint a car drab olive in order to reduce pedestrian death is beyond me, but sure, a state should probably have the authority to regulate commerce in this way. We’re already not allowed to put LEDs on a car’s hubcaps or license plate [US].

Sure, you’re describing a hilariously awful misuse of that authority. But fining me for my awesome cool glo-purple license plate outline, and requiring me to disable it, is just a much much milder misuse of that authority.

[Matt:] “If Australia imposes its requirements equally on all brands of cigarettes, then it’s unlikely to be found to be a non-tariff barrier to trade anyway.”

Does that also hold if they impose restrictions on all brands of French champagne?

On all brands of wine, sure; on all brands of ‘champagne’ = sparkling wine… probably; on all brands of authentic French champagne, nah. The first or the second of those has to be relevant here, right? The cigarettes in question aren’t just coming from one country the way Champagne champagne would.

11

JP Stormcrow 08.18.12 at 3:17 pm

Sure, you’re describing a hilariously awful misuse of that authority

Right. The “broccoli horrible” meets the “drab olive car horrible”.

12

Chaz 08.18.12 at 3:21 pm

“Now tobacco companies are an easy target, but just how far does this national sovereignty go?”

According to hundreds of years of international tradition, it goes really far. If they want they can create a communist collective and ban private commerce entirely.*

“Can Australia create a law that requires all cars must look the same, be painted drab olive, and carry the slogan “This machine kills pedestrians” in dayglo orange?”

Yes.

In general, if you have some sort of libertarian or just liberal objection to the legislature passing laws, you might want to call for constitutional restrictions. That’s what the other libertarians do. Advocating that liberty be defended by petty WTO complaints is kind of bizarre.

*I bet the WTO actually does have some bs restrictions preventing communism, but the traditions of national sovereignty say a state is absolutely entitled to adopt it. As stated in the OP, WTO is political more than legal.

13

Josh G. 08.18.12 at 3:28 pm

ogmb @ 7: “Now tobacco companies are an easy target, but just how far does this national sovereignty go? Can Australia create a law that requires all cars must look the same, be painted drab olive, and carry the slogan “This machine kills pedestrians” in dayglo orange?

Of course they can. But they won’t, because no one actually wants that to happen. What stops them from enacting your hypothetical proposal is not constitutional law or trade law, but the normal democratic process. As noted by JP Stormcrow @ 11, this is basically the same as the silly broccoli argument made by opponents of the PPACA in the United States.

14

Watson Ladd 08.18.12 at 4:01 pm

So a specious set of legal arguments is met with thundering silence. This doesn’t expose any problems with the WTO: the losers of lawsuits turn to politics, not the winners. (See Brown v. Board of Ed, Roe v. Wade, Kelo v. New London for examples in US politics) Had the case gone the other way, there would have been space for opposition to the WTO politically.

As for the democratic process, it is worth noting that sterilization laws, laws enacting discrimination, and laws restricting abortion all existed with wide support in the US. As recently as 2003 sodomy was not decriminalized through the legislative process in Texas but via the Supreme Court. The WTO exists because otherwise politicians lack the moral fiber to do the right thing and abolish trade barriers, and so they devise mechanisms to bind their will. Likewise a congressman opposing an unconsistutional law need not stand up and denounce it, but merely point out its unconstitutionality and the resources involved in litigating it.

15

Norwegian Guy 08.18.12 at 6:12 pm

There are plenty of countries were laws have been changed in a socially progressive direction without the involvement of the court system. For instance, in Norway male homosexuality and abortion were both legalized in the 1970s by acts of Parliament. A few conservatives, having lost in the political process, tried to use the courts to stop liberalized laws regarding both abortion and same-sex marriage, but failed. Moreover, when such issues are decided by democratic processes, they fairly quickly stop being important and controversial political issues. In the US, even after 40 years the abortion issue hasn’t been settled. And there is no a priori reason to believe – especially for people of the left – that unelected upper middle class judges are better at deciding political controversies than democratically elected representatives of the people.

16

Substance McGravitas 08.18.12 at 6:38 pm

The WTO exists because otherwise politicians lack the moral fiber to do the right thing

17

JW Mason 08.18.12 at 6:46 pm

18

Watson Ladd 08.18.12 at 8:42 pm

Substance, this is the fairly standard view of trade negotiations. All parties want to lower tariffs and have the power to do so. What they don’t have is the will to stand up to those constituencies that lose out. So they create trade treaties. The penalty for raising prices for your voters is having another country raise prices for its voters. Politicians pandering to the worst impulses of the people is very common.

Norway somehow is a member of the ECJ. The legislators in Norway do not trust themselves to protect the rights of Norwegians, for else they wouldn’t be a part. In the US labor law went from very pro-union in the 1930’s to increasingly anti-union by the 1980’s, in part due to changing political consensus. Similar reversals accompanied woman’s suffrage in the early US: New Jersey permitted women to vote prior to the formation of the federal government. The end of Reconstruction involved the systemic denial of rights by newly empowered democratic governments, in areas where military dictatorship ensured the liberty of the people. Ancient Athens notoriously ordered the death of a general, then rescinded the order and gave him a medal. Even the US Supreme Court has not that been that bad with AEDPA.

Democratic legitimacy is no guarantee of liberty.

19

John Quiggin 08.18.12 at 8:51 pm

Watson, that’s enough on this thread.

20

gordon 08.19.12 at 12:39 am

It’s difficult to know whether to respond critically to a commenter who has been banned from the thread. He can’t reply to defend his position, so criticism seems unfair. On the other hand, the issue might be important and other commenters might take up his position and ensure the issue is discussed. I’ll kick it upstairs to management.

Watson Ladd (at 18): “All parties want to lower tariffs…” Historically, this is wildly wrong. I need only mention the growth of US manufacturing behind a tariff wall from roughly the Civil War to the post-WWII GATT period, and of course Ha-Joon Chang’s analyses of the way developed nations have used tariffs and then tried to prevent developing countries from using them in their turn. Today we also have incredible campaigns to enforce very restrictive IP regimes which have tariff-like effects and lead to the same sort of monopoly and rent-seeking behaviour.

21

eddie 08.19.12 at 2:27 am

There’s really no point in engaging with a fantasist.

22

Tiberius Gracchus 08.19.12 at 3:04 pm

Champerty and barratry have to do with how litigation is funded, not advertising. It was the rise of contingency work, not class actions, and the introduction of antitrust/competition law into litigation (and other legal practice) that doomed champerty and barratry.

23

John David Galt 08.19.12 at 4:50 pm

It was the rise of contingency work, not class actions, and the introduction of antitrust/competition law into litigation (and other legal practice) that doomed champerty and barratry.

Not to mention the decisions of powerful people to start committing both offenses, often under cover of anonymity. Everybody knows that Bill Gates funded SCO v. Linux, but I doubt he has ever admitted to it in public.

24

Chrisb 08.20.12 at 12:55 am

“Can Australia create a law that requires all cars must look the same, be painted drab olive, and carry the slogan “This machine kills pedestrians” in dayglo orange?”
Well, if it wanted to save the maximum amount of lives, all cars would be white: studies show…. and if mandating that all cars be white saved lives, why would any sane person want to rule it out of the available options?

25

reason 08.20.12 at 9:53 am

I’m pretty sure in Germany white cars have a so-so safety record. Silver cars have the best safety record. It may not be the colour of the cars themselves that has the safety impact, it may be the that the colours reflect the personality of the driver. Then again the prevalence of snow may be influencing a comparison between Australia and Germany.

26

Katherine 08.20.12 at 11:39 am

Norway somehow is a member of the ECJ. The legislators in Norway do not trust themselves to protect the rights of Norwegians, for else they wouldn’t be a part.

As gordon said, it seems a bit unfair to reply to someone when they can’t reply back, but this comment from Watson Ladd is a bugbear of mine, so what the hell:

- The ECJ is the court of the European Union, of which Norway is not a member.

- Norway is however a member of Council of Europe.

-The Council of Europe has nothing to do with the EU, although confusingly it uses the same flag. It is not related to the European Council, or the Council of the European Union, which are both EU institutions.

- The Council of Europe is a wider collection of European states (47, including Turkey and Russia, just for example) that deals with issues of human rights, rule of law, democratic standards etc.

-The thing the Council of Europe is most famous for is the European Convention on Human Rights. There are many other treaties produced under its aegis, but this is biggest one.

- The Court tasked with deciding things under the ECHR is the European Court of Human Rights.

-The European Court of Human Rights has nothing to do with the ECJ.

27

JP Stormcrow 08.20.12 at 6:15 pm

I learned over the weekend, that Rush in their libertarian lyrics mode had gotten to the drab olive car horrible decades before ogmb. Their song “Red Barchetta” from 1981 (itself based on an earlier short story in Road and Track) describes a future in which many classes of vehicles have been prohibited by “the Motor Law”. The narrator’s uncle has kept one of these illegal vehicles (the titular red barchetta sportscar) in pristine condition for some “fifty-odd years” and keeps it hidden at his secret country home.

And thus is the intellectual flame kept alive between generations of libertarians (faux and real).

28

Antoni Jaume 08.20.12 at 7:53 pm

«-The Council of Europe has nothing to do with the EU, although confusingly it uses the same flag.»

In fact that flag was originally only the flag of the Council of Europe, it was the EU that copied it.

29

Sweetcakes 08.20.12 at 9:25 pm

Ukraine is a sock puppet for BAT and its citizens have nothing to gain from this complaint. Ukraine exports no cigarettes to Australia, has no trade interest here, and if Australia were to lose the claim, Ukraine would have no right to retaliate against Australia.

So why did they bring this case? The complaint was a big surprise to the anti-tobacco forces in Ukraine: http://www.smh.com.au/opinion/political-news/mystery-over-ukraine-tobacco-law-challenge-20120326-1vunl.html

The WTO complaints are linked to investor-state complaints brought by PMI and BAT against Australia. Big Tobacco wants to get a WTO judgment that Australia is violating the TRIPS agreement, and use that to get a damages award against the Australian government. The big question is whether the WTO will let itself be used this way.

30

Lurker 08.21.12 at 11:52 am

Following Katherine, I also would like to note that the European view on constitutional law and protection of human rights is much different from the US one. First of all, while most European (and all EEA) countries have independent judiciaries, the division of power to the three branches of government is not clear-cut. First of all, the “executive branch” doesn’t really exist as such in many European countries. Instead, there may be executive agencies directly under the control of parliament, and the different parts of the executive branch routinely sue each other or apply for permits from each other, which is a conceptual impossibility in the US.

From the human rights viewpoint, the different types of ombudsmen are a particularly interesting case. They are not judicial authorities, and they don’t really belong to the executive branch, either. Their quite free-moving cogs in the machinery of government.

So here in Europe, the protection of human rights is based mainly on the legislative will. In addition to that, we have a number of intranational extra-judicial arbitrators wielding different types of soft and hard power ensuring that rights are maintained, and a rather powerful international court, the ECHR, ensuring that the rights and liberties are not trodden on.

31

Ebenezer Scrooge 08.22.12 at 10:49 am

Lurker,
It might be a conceptual impossibility for different parts of the US Executive branch to sue each other or get permits from each other, but still they do so. US administrative practice strays far from Constitutional theory: the tension between Sunday law and workaday law. We also have ombudsmen, although they’re probably not as prevalent here as they are on your side of the Lake.
But I do agree that the EU view on human rights is substantially different from the US, for reasons that you allude to.

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