The European Court of Justice Advocate General, Leendert Geelhoed, backed an EU ruling, which will see 30% of each cigarette package covered by general warnings such as "smoking kills".
BAT and Imperial had argued that the EU had gone beyond its jurisdiction in making the ruling in May 2001, because it would in no way improve the EU's single market.
The firms also argued that the ruling was unfair because it applied to products made for export markets and for sale in the EU.
However, Geelhoed has said that if it were up to each of the EU member states' governments to set tobacco labelling laws, the different laws would create barriers to trade. And as far as the issue of cigarettes made for export, the EU had the right to demand they meet the same standards as domestic cigarettes because it wanted to prevent a black market from developing.
A final ruling on the case is likely to follow in the next few months, with the court siding with the advocate general's opinion in about 80% of cases.
A separate challenge to the EU, made by Japan Tobacco over the ban on using words such as "light" and "mild" on cigarettes has not yet been ruled upon. Japan Tobacco is arguing that it will affect its Mild Seven brand, which is sold all over the world.
The new legislation, which is due to come into effect in late 2003 and early 2004 will mean that all cigarettes sold in the EU must not have more than 10mg of tar in each cigarette and must feature warnings printed in black type on a white background.
Furthermore, the European Commission is looking at introducing rules that would see colour photographs appear on packs to illustrate the effects of smoking.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .