Philip Morris v. Uruguay: Tobacco‐Control Measures Under BIT Article 3

Case Title

Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. (The Claimants) Vs. Oriental Republic Of Uruguay (The Respondent) (2016)

Facts

The parties involved are Abal Hermanos and associates, the plaintiff, and the government of the Oriental Republic of Uruguay, the defendant. The claimants argued that the defendant violated the accord between the Swiss Confederation and the Oriental Republic of Uruguay (BIT) by implementing certain tobacco-control measures that affected the treatment of cigarette trademarks in which they had invested. The regulations included the restriction of tobacco sellers from marketing more than a single variant of cigarettes per brand and an increase of the size of graphic health precautions on the back and front of the cigarette packages, known as the single presentation requirement and challenged measures, respectively. The International Centre for Settlement of Investment Disputes in Washington, D.C., solved the case because it involved two nations. The claimants’ parent company is headquartered in the United States, while other partners are in Switzerland and Uruguay.

Issue

Do the Uruguay tobacco-control measures constitute a breach of the defendant’s obligations under BIT Article 3?

Holding

The Uruguay tobacco-control measures do not violate the respondent’s obligations under BIT article 3 because the measures are aimed at protecting Uruguay’s people’s health and not tormenting businesses.

The law of the land governs all businesses operating in Uruguay, whether domestic or foreign. The BIT agreement between Switzerland and Uruguay sought to protect and create a favorable investment environment for the businesses of both countries. However, the investments to be protected must abide by the law of either nation. In this case, the Abal (Claimants) are obligated to run their business according to Uruguay law. Therefore, when Uruguay’s public health department imposed harsh tobacco-control measures, the claimants were automatically bound by the law to adjust. Additionally, if the claimants do not abide by the investment law of the land, they cannot be protected by the treaty.

Application

Rule

Article 3 of BIT (Agreement between the Swiss Confederation and the Oriental Republic of Uruguay on the Reciprocal Promotion and Protection of Investments dated 7 October 1988). The article guarantees the protection and treatment of investments where both contractual nations should offer investment protection within the legislation, fair and equitable treatment, and prevent double taxation and discrimination.

Application

Given the above provisions by the law, the BIT can only protect investors from unlawful practices. In this case, there are no such practices but an imposition of legal guidance by the law.

Concurring Opinion Reasoning

The tribunal did exceptional work in conducting the hearings of the case. There was also adequate observation of both local and foreign law, considering that it was international. The court awarded the Republic of Uruguay the exact cost of the proceedings. The tribunal also handled the case with much care and diligence, mainly because it involved expansive laws of three nations.

Case Conclusion

Although the health department of Uruguay did not violate Article 3 of the BIT, the claimants have the right to protest against laws that threaten the use of their trademarks. According to the law, the size of the health warning posters should be increased from 50% to 80% of the cigarette cover, thus leaving only 20% of the selling company to display their trademarks. Therefore, it is a denial of justice if the claimants have no say regarding their trademarks.