Uruguay wins dispute with tobacco giant Philip Morris

MONTEVIDEO, Uruguay – Tobacco giant Philip Morris has lost an international dispute surrounding the sale of cigarettes in Uruguay and must continue to cover packs sold in the South American country with graphic warning labels and restrict its branding practices, President Tabare Vazquez announced Friday.

In a televised address, Vazquez said the International Center for Settlement of Investment Disputes rejected a challenge by Philip Morris to his government’s strict anti-smoking policies, calling it a victory for efforts to protect public health and his country’s national sovereignty.

“The health measures that we have imposed to control tobacco and protect the health of our people have been recognized as legitimate and adopted as a sovereign function of our republic,” said Vazquez, an oncologist who had spearheaded the anti-smoking campaign.

Philip Morris International had challenged Uruguay’s requirement that graphic warning labels cover 80 per cent of the front and back of cigarette packages and that each brand only have a single product presentation. Philip Morris contended that Uruguay’s tobacco law violated a bilateral treaty and also hurt its intellectual property rights and sales.

The Washington D.C.-based tribunal also ordered Philip Morris to pay Uruguay $7 million and reimburse other costs associated with the case.

Marc Firestone, Philip Morris International Senior Vice-President and General Counsel, said the tobacco giant would respect the arbitral tribunal’s decision.

“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. 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.”