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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.

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