Defeat Of Philip Morris In Its Corporate Sovereignty Case Against Uruguay Likely To Open Floodgates For Tobacco Packaging Legislation
from the this-is-the-big-one dept
Last December, Techdirt wrote about Australia fending off an attempt by Philip Morris to use corporate sovereignty to overturn the country’s plain-packaging regulations. As we pointed out, this wasn’t proof that investor-state dispute settlement (ISDS) was no threat to national sovereignty, despite what some were claiming. Australia won on purely procedural grounds, not because the ISDS tribunal agreed that Australia had a fundamental right to regulate.
However, as the Techdirt article also mentioned, there is another tobacco case based on corporate sovereignty provisions in a trade deal — the one which Philip Morris brought against Uruguay. It’s fortunate that Uruguay decided not to roll over, but to contest the case — something it could only do because of funding from a foundation set up by former New York mayor Michael Bloomberg — because a tribunal has just found in its favor:
The award released on Friday brings to a close a six year dispute between the global tobacco giant and Uruguay, with an arbitral tribunal upholding Uruguay’s right to do two things: prohibit tobacco companies marketing cigarettes in ways that falsely present some cigarettes as less harmful than others and require tobacco companies to use 80% of the front and back of cigarette packs for graphic warnings of the health hazards of smoking.
Uruguay’s lawyers, the Boston-based firm Foley Hoag, praised the decision as having broad international consequences.
As that quotation from an article in The Mandarin suggests, this is a much more significant decision than the Australian one, because Philip Morris did not lose on procedural grounds this time. That establishes a crucial precedent for other countries that wish to introduce health measures affecting tobacco packaging. Several have been holding off from bringing in such laws until they knew what happened to Australia and Uruguay, and therefore what legal risks they would run. We can probably expect many more nations to move forward with new legislation now, not least because Philip Morris was also ordered to pay $7 million of Uruguay’s $10.3 million costs (pdf).
Uruguay’s regulations on cigarettes did not bring in plain packs of the kind adopted by Australia. Instead, the South American country currently limits how much of the cigarette packet can be used for branding, and also stops tobacco companies from making misleading claims that their products are “mild” or “ultra-light.” However, The Mandarin notes that Uruguay will:
soon move towards all tobacco products being sold in generic packages, with even larger warnings of the harms caused by smoking, in an effort to further reduce smoking levels.
The latest defeat for Philip Morris clears the way for Uruguay to do that. Even more importantly, it also represents a high-profile failure of the tobacco company’s strategy of using the threat of ISDS litigation to apply pressure to nations not to bring in legislation. It’s hard not to think that the tribunal’s refusal to sanction this approach is due to a massive growth in public awareness and public antipathy towards corporate sovereignty, an area that not so long ago was a sleepy corner of trade law familiar to only a few specialist lawyers.