PMI dispute ruling favors Uruguay

| July 11, 2016

An investment disputes tribunal on Friday issued a binding ruling in favor of Uruguay in a case brought against the country by Philip Morris, according to a press note issued by the O’Neill Institute for National and Global Health Law.

Philip Morris first brought its case in 2010 before the International Centre for Settlement of Investment Disputes (ICSID) claiming that the country’s tobacco control policies interfered with its investments. Specifically, the company claimed it had ‘already sustained, and will continue to sustain, substantial losses’.

Public health law expert Oscar A. Cabrera, who is the executive director of the O’Neill Institute and an expert in international and domestic laws related to tobacco control, was quoted as saying that Friday’s ruling was an historic and significant victory for tobacco control worldwide.

“This decision is the right one to protect people from the death and harms caused by tobacco products,” said Cabrera, who has worked on tobacco control in Latin America, and has supported tobacco control initiatives in Uruguay.

“We hope the ruling will encourage countries to consider implementing more effective tobacco control policies without the fear of international investment litigation from big tobacco. Philip Morris used this arbitration not only to try to pressure Uruguay to reform its tobacco control regulations, but also to intimidate other countries that wanted to pursue similar measures.”

In fact, Philip Morris International expressed respect for the ruling, which it described in a press note posted on its website as having been made in respect of ‘arbitration between PMI and Uruguay regarding two regulations that Uruguay implemented in 2009’. The arbitration had been brought under ‘Uruguay’s 1988 investment protection treaty with Switzerland, which provides a neutral forum for dispute resolution’.

Although PMI did not spell out the two regulations, they largely concerned the requirement that graphic health warnings be included on 80 percent of the front and back panels of cigarette packs, and restrictions that in effect limited the sale of cigarette brands to only one variant.

“For the last seven years, we have already been complying with the regulations at issue in the case, so today’s outcome doesn’t change the status quo,” said Marc Firestone, PMI’s senior vice president and general counsel.

“We’ve never questioned Uruguay’s authority to protect public health, and this case wasn’t about broad issues of tobacco policy. The arbitration concerned an important, but unusual, set of facts that called for clarification under international law, which the parties have now received. We thank the tribunal for its assessment and respect its decision.

“More broadly, we continue to believe that thoughtful diplomacy is important to resolving complex social phenomena. We reiterate our willingness to meet with representatives of the Uruguayan government, especially to explore regulatory frameworks that would enable the hundreds of thousands of adult smokers in the county to have informed access to reduced-risk alternatives to smoking.”

PMI added that, with this case now over, it was no longer a party to any investment protection claims.

Category: Breaking News, Litigation

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