The Gillard government's plea to Big Tobacco not to launch legal action against Labor's plain-packaging laws has fallen on deaf ears, with Philip Morris announcing it has already served notice of a dispute.
The federal parliament on Monday passed world-first laws that will force all cigarettes to be sold in drab olive-brown packs from December 2012.
Health Minister Nicola Roxon immediately demanded that Big Tobacco respect that mandate.
"We know that just as many smokers are addicted to tobacco and nicotine the tobacco companies are addicted to litigation," Ms Roxon told reporters in Canberra.
"But I call on them today to consider respecting the will of the parliament.
"Both houses, and all parties, have supported this legislation."
But less than an hour later, Philip Morris announced it had already begun legal proceedings using a bilateral investment treaty Australia signed with Hong Kong 20 years ago.
"The notice of arbitration was served on the government immediately following the passage of plain-packaging legislation for tobacco products by the Australian parliament," parent company Philip Morris Asia Limited said in a statement from Hong Kong where it's based.
Philip Morris forewarned the government of its plan in late June, when it entered a three-month mandatory negotiation period through the United Nations commission on international trade law.
The cigarette manufacturer argues the commonwealth is effectively planning to steal the company's brands in contravention of the investment treaty.
Philip Morris said on Monday that damages could run to billions of dollars and the legal process could take "two to three years".
"In passing the laws today, in our view, the government has breached an international treaty," Philip Morris spokesman Chris Argent told AAP.
"Plain packaging will damage the value of our brands and there are international business laws against that."
But legal experts believe things aren't that clear-cut.
A lawyer who's had more experience than most fighting cigarette companies in court, Peter Gordon, told AAP in late June that Philip Morris was actually on shaky ground.
Mr Gordon argued that the commonwealth wasn't taking away the property rights of tobacco companies but rather ensuring they weren't used to improperly promote cigarette use among kids.
At the same time, international law expert Don Anton noted that public regulation for a public purpose was not direct or indirect expropriation "and therefore is not prohibited by the investment treaty".
Philip Morris, like British American Tobacco Australia (BATA), also plans to launch domestic action in the High Court of Australia.
Ms Roxon was asked on Monday if legal action would delay the start of plain packaging.
"We don't believe that it needs to," she replied.
"(But) I'm not going to go through the legal ins and outs and possibilities as we potentially face litigation in lots of different forums."
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