Uruguay defeats Philip Morris – big win for global tobacco control

15 July 2016

On Friday 8 July, Uruguay was handed a monumental victory after a six year legal battle brought against it by Philip Morris international (PMI). Uruguay’s victory against the world’s largest transnational tobacco company is reverberating hope around the world especially for developing countries.

To protect public health, Uruguay passed legislation requiring tobacco companies to apply 80% pictorial health warnings to cover cigarette packs and limit the sales of cigarettes to only one variant per brand to prevent smokers from being misled into thinking one variant was safer than another. At that time, Uruguay’s 80% pictorial warnings were the largest in the world and welcomed as a bold step by a small developing country.

PMI responded to this public health measure by using its arsenal of lawyers and big war chest and launched a legal challenge against the government in March 2010 in the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington D.C.. Based on an obscure 1991 Switzerland-Uruguay bilateral investment treaty, PMI claimed its intellectual property rights had been violated and sales hurt.

Uruguay has a small population of about 3.4 million people and its cigarette market is not big. However in using the trade platform to challenge Uruguay, PMI, was really sending a message to the rest of the world – be ready to be sued if you strengthen tobacco control measures such as enlarged pictorial warnings on cigarette packs or plain packaging.

While Uruguay did not have the finances nor the technical expertise to fight this challenge, it did have an oncologist for a President, who was committed to protecting his people from the ravages of smoking and who spearheaded the anti-smoking campaign.

Fortunately for Uruguay, the Bloomberg Initiative stepped in and provided funds and technical support for its defence through the six years until its victory against the tobacco giant.

Uruguay did not back off nor suspend their strong tobacco control measures. Last Friday, Uruguay was vindicated for exercising its sovereign right to protect public health. The Washington D.C.-based tribunal ordered PMI to pay Uruguay US$7 million and reimburse other costs associated with the case.

According to a statement from Uruguay’s President, “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.”

In the ASEAN region, Singapore and Thailand are in varying stages of legislative preparation for plain packaging, while Malaysia has announced plans to follow its neighbours. Ever since Malaysia announced plans for plain packaging in February, there has been a chorus of protests from the tobacco industry and its sympathisers with all too familiar arguments about how this will violate intellectual property rights, even violate human rights, and warning the government of repercussions.

Challenging and suing a government is a well-known intimidation tactic because most developing country governments simply do not have the funds for protracted legal challenges. Previously Philip Morris has sued the Malaysian and Thai governments on other tobacco control measures. These cases delayed government efforts in reducing tobacco use.

Recently, Australia won a similar challenge brought against it by Philip Morris Asia, which again used a bilateral trade agreement to challenge Australia’s plain packaging laws.

The governments in the ASEAN region can take heart from the victories of both Uruguay and Australia that taking stringent tobacco control measures is the sovereign right of the government. The governments must protect public health from a harmful business which causes 470,000 deaths in the region every year.

If Uruguay can prevail against the tobacco giant and win, so too can our governments. Governments in the region should increase warnings on pack to more than 80%, proceed with plain packaging measures and ban pack display at retail outlets.

SEATCA statement: ‘Hats off to Uruguay’ here

SEATCA Tobacco Packaging and Labelling Index here

FCTC Secretariat’s statement here

CTFK: Philip Morris Vs Uruguay: Key quotes here

CTFK: Philip Morris Vs Uruguay: Key findings here