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July 8th, 2016:

Uruguay defeats Philip Morris test case lawsuit

Uruguay has won a landmark lawsuit against Philip Morris International, which was suing the South American country for its strict regulations on smoking in what was seen as a test case for the tobacco industry.

Friday’s decision sets an important precedent for other countries considering implementing similar legislation, with anti-tobacco campaigners accusing Philip Morris of using litigation to scare others from following Uruguay’s example.

“The attempts of the tobacco companies have been roundly rejected,” said Uruguay’s President Tabaré Vázquez, an oncologist who has made the fight against tobacco one of his flagship policies. “It is not acceptable to prioritise commercial considerations over the fundamental right to health and life,” he added in a televised address to the nation.

In its lawsuit at the World Bank’s International Center for Settlement of Investment Disputes, which marked the first time a tobacco group had taken on a country in an international court, Philip Morris argued that Uruguay had violated terms of a bilateral investment treaty with Switzerland, where it has its headquarters in Lausanne.

The world’s biggest tobacco company — whose annual revenues of more than $80bn across 180 countries far exceed Uruguay’s gross domestic product of closer to $50bn — claimed that a 2009 anti-tobacco law damaged its intellectual property rights and hit sales.

Philip Morris — which has lost lawsuits in Norway, Australia and the UK — opposed the Uruguayan anti-tobacco law’s requirements that graphic health warnings cover 80 per cent of both sides of cigarette packets, and that brands have a single image, thereby prohibiting sub-brands such as Marlboro Red or Marlboro Gold. That forced Philip Morris to withdraw seven of its 12 brands from shops in Uruguay.

“We’ve never questioned Uruguay’s authority to protect public health,” said Marc Firestone, general counsel at Philip Morris, who clarified that the company had been complying with the regulations at issue in the case for the past seven years. “The arbitration concerned an important, but unusual, set of facts that called for clarification under international law, which the parties have now received,” he added.

Some observers have remarked on the apparent irony that in 2013 Uruguay legalised marijuana, which is due to start being sold in pharmacies this month, while at the same time it is clamping down on tobacco. But others say that Uruguay’s trailblazing efforts to regulate marijuana and tobacco are consistent, arguing that both industries are insufficiently controlled.

“This is a major victory for the people of Uruguay — and it shows countries everywhere that they can stand up to tobacco companies and win,” said former New York City Mayor Michael Bloomberg, who provided Uruguay’s lawsuit with financial support. “No country should ever be intimidated by the threat of a tobacco company lawsuit, and this case will help embolden more nations to take actions that will save lives,” he added.

According to health ministry figures, the number of Uruguayans who smoke had fallen to 22 per cent of the population by 2014, from 35 per cent in 2005. The number of young smokers fell to 8 per cent in 2014, from 23 per cent in 2006, when Uruguay became the first country in the region to ban smoking in enclosed public spaces.

Phillip Morris loses tough-on-tobacco lawsuit in Uruguay

The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled in favor of Uruguay on Friday in a suit filed by Philip Morris International seeking compensation for economic damages caused by the nation’s anti-tobacco measures.

Uruguay imposed a ban on smoking in public spaces in 2006, as it raised taxes on tobacco products and forced firms to include large warnings and graphic images including diseased lungs and rotting teeth on cigarette packages. It also banned the use of the words “light” and “mild” from cigarette packs to try to dispel smokers’ misguided beliefs that the products are safer.

“The health measures we implemented for controlling tobacco usage and for protecting the health of our people have been expressly recognized as legitimate and also adopted as part of the sovereign power of our republic,” Uruguayan President Tabare Vazquez said in a televised speech.

Vazquez, an oncologist, helped spearhead the measures during his first term in office from 2005 to 2010.

In a lengthy decision published on Friday, the ICSID said it had ruled to dismiss Philip Morris’ demand that the regulations be withdrawn, or not applied to the company, or that it be paid $22 million in damages instead.

It ordered the tobacco company to pay Uruguay $7 million and to cover “all the fees and expenses of the Tribunal and ICSID’s administrative fees and expenses.”

Phillip Morris said it respected the tribunal’s decision.

“We’ve never questioned Uruguay’s authority to protect public health, and this case wasn’t about broad issues of tobacco policy,” Marc Firestone, Philip Morris International senior vice president and general counsel, said in a statement.

“The arbitration concerned an important, but unusual, set of facts that called for clarification under international law,” added Firestone.

The tobacco company said that it would like to meet with Uruguay’s government, to explore regulatory frameworks that would enable smokers “in the country to have informed access to reduced-risk alternatives to smoking.”

Action on Smoking and Health (ASH), the oldest anti-tobacco organization in the United States, applauded Uruguay for winning the case, but said Phillip Morris “accomplished its primary goal.”

Phillip Morris “will no doubt shed some public crocodile tears, but their main goal in launching the suit has been realized, six years and millions of dollars have been spent defending a nondiscriminatory law that was intended purely to protect public health,” said Laurent Huber, executive director for ASH.

“This has already resulted in regulatory chill in other countries, preventing tobacco legislation that would have saved lives,” Huber said.

(Reporting by Anthony Esposito and Malena Castaldi; Writing by Anthony Esposito; Editing by Tom Brown)

Philip Morris and Uruguay ICSID Case No. ARB/10/7

Download (PDF, 3.36MB)

Treat e-cigs like tobacco

A new study by researchers at the University of Southern California finds that adolescents who use electronic cigarettes are six times more likely than their peers to smoke tobacco later.

Promoters of electronic cigarettes have tried to minimize their regulation by contending that the devices primarily are an aid to help people stop smoking tobacco cigarettes.

Many people do indeed use the devices to satisfy their nicotine addiction without ingesting the remainder of the carcinogenic chemical mix in tobacco.

But that is only one part of the market. The industry, much like the tobacco industry itself, markets to young people who never have smoked. New research, demonstrating that teenagers who “vape” are more likely than their nonvaping peers to smoke tobacco later, demonstrates that e-cigarettes should be regulated much like tobacco.

The study, by researchers from the Department of Preventive Medicine at the University of Southern California, was published recently in the journal Pediatrics. It found that 40.4 percent of adolescents who reported that they had vaped in 11th and 12th grades went on to smoke tobacco cigarettes, as opposed to 10.4 percent of their peers who had not used e-cigarettes. The researchers adjusted for a variety of factors relative to smoking, and found that young vapers overall were 6.17 times more likely than their peer group nonvapers to smoke cigarettes later.

Most important, the researchers said that vaping was a contributing factor to later tobacco use, not simply a way station for younger users who would have started smoking tobacco later in any case, when they were old enough to legally do so.

The findings call for the state and federal government to treat e-cigarettes like tobacco cigarettes for the purpose of public health policy.