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* Australia set global precedent by banning tobacco logos
* Plaintiffs say hampers trade, hurts intellectual property
* Two years of delays at WTO over; challenge to be heard
By Tom Miles
GENEVA, April 25 (Reuters) - An Australian law forcing cigarette companies to sell their products in plain packets is about to be tested in court, diplomats at the World Trade Organization said on Friday, ending more than two years of procedural delay.
Cuba, Ukraine, Indonesia, Honduras and Dominican Republic have brought the action against Australia, the first country to ban the colourful logos used to sell tobacco brands around the world, a law aimed at reducing addiction and disease.
Opponents of the law, who say it is heavy-handed and an invitation to counterfeiters, had hoped other countries would hold off from following Australia's example pending a WTO verdict, but Britain, Ireland and New Zealand have already begun drafting similar legislation.
Since late 2012, tobacco products in Australia can only be sold in drab olive-coloured packets that look more like military or prison issue, with brands printed in small standardised fonts.
The five countries challenging it say the legislation is a barrier to trade and restricts intellectual property.
"My country fully shares Australia's health objectives. However, its plain packaging measure is failing to have the desired health effects of reducing smoking prevalence and remains detrimental to our premium tobacco industry," Katrina Naut, the Dominican Republic's foreign trade chief, said in a statement.
"By banning all design elements from tobacco packaging, plain packaging precludes our producers from differentiating their premium products from competitors in the marketplace."
After two years of slow-going procedure, Australia and its five challengers have agreed the conditions that will allow the case to get under way within weeks and for a ruling to be made potentially as soon as November.
In the key step to get the process started, WTO chief Roberto Azevedo will appoint three panellists by May 5 to judge the dispute, according to transcripts of statements at the body's dispute settlement body on Friday.
As well as its huge importance for the global tobacco industry, the case could have implications in other sectors, as some public health advocates see potential for plain packaging laws to extend into areas such as alcohol and unhealthy foods.
The appointment of WTO panellists will set the clock ticking on a six-month deadline for them to rule on the dispute.
However, panels frequently ask for more time and the WTO's dispute system is suffering from a bottleneck.
Any party to the dispute could also appeal, which will add months more, and some disputes drag on for years due to disagreements over whether a country ruled to be in the wrong has done enough to comply with the terms of a judgment. (Editing by Robin Pomeroy)