A landmark piece of EU anti-tobacco legislation, introduced by the former Irish Commissioner, Mr Padraig Flynn, has been struck down by the European Court of Justice (ECJ).
The Government has made clear, however, it remains committed to the substance of the legislation and the decision will not affect forthcoming legislation.
The EU's Luxembourg-based court ruled that the 1998 directive phasing out the advertising and sponsorship of tobacco products by 2006 was too extensive in scope to be justified in treaty terms as an internal market measure.
In particular, the court said it could not see how a ban on advertising tobacco on posters, parasols, ashtrays or cinema ad spots could have "helped to facilitate trade" in those products between EU member-states.
The Commission took comfort, however, from the court's view that more limited, partial bans, notably of newspaper and periodicals advertising, could be introduced as internal market measures because health protection is a constituent part of community policies.
The Commissioner for Health and Consumer Safety, Mr David Byrne, said 500,000 EU citizens died every year from the effects of tobacco and he pledged to reintroduce new legislation in conformity with the ruling.
He also welcomed the decision on Wednesday of the International Motorsport Federation to impose a voluntary worldwide ban on the use of tobacco sponsorship from the end of 2006.
The ECJ decision confirms the non-binding opinion in May from the court's Irish Advocate General, Mr Nial Fennelly, who found for Germany and several tobacco firms, including Imperial Tobacco Group, Gallaher Group, and British American Tobacco.
British-based Imperial Tobacco Group, which led the fight against the directive, said in a statement: "We are naturally pleased that the European Court has decided that this EU directive should be annulled."
However, the world's biggest tobacco maker, Philip Morris, saw more struggles ahead. "This decision offers no solution as to if and how tobacco advertising should be regulated at the European level."
Ireland, the UK and Finland have indicated they intend to proceed with the substance of the EU directive. The Department of Health in the last few days agreed the heads of a new Bill which will toughen compliance measures and strengthen controls on distribution.
The Government has already used its regulatory powers to complement a TV ban with one on newspaper advertising, and sponsorship of sports events has been frozen for some time. The number of events which can be sponsored is limited to five and a budget ceiling is set each year.
The Minister for Health and Children, Mr Martin, said the new anti-smoking laws to be introduced here would not be affected by the overturning of the EU tobacco directive. He was going ahead with legislation which would give Ireland some of the toughest tobacco laws in the world.
The heads of the new Bill were approved by the Cabinet earlier this week. "We are going full steam ahead. This has no material effect on our policy."
The chairman of the antismoking group, Ash Ireland, Dr Fenton Howell, said the judgment was disappointing. However, it was "not the end of the world by any stretch since it was lost on a technicality".
