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Minnow ‘stares down’ Big Tobacco

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Tobacco giant Philip Morris has been ordered to pay Uruguay US$7 million in damages and court costs after it lost a legal challenge to the South American country’s anti-smoking laws.

In a ruling hailed as a landmark outcome by public health advocates, the International Centre for the Settlement of Investment Disputes (ICSID) early this month rejected a claim by Philip Morris that Uruguay laws banning smoking indoors, increasing tobacco taxes and requiring cigarette packets carry prominent health warnings breached the terms of a 1998 trade agreement between the Latin American country and Switzerland.

The ICSID, a branch of the World Bank, judged that “the responsibility for public health measures rests with the government, and investment tribunals should pay great deference to governmental judgments of national needs in matters such as the protection of public health”.

Public Health Association of Australia past President Professor Mike Daube said the case was “a historic win for global public health”.

“It confirms the sovereign rights of all governments to protect the public’s health,” Professor Daube said. “Uruguay refused to be intimidated by Big Tobacco and has been completely vindicated.”

Under the Uruguayan laws, the Government ordered manufacturers of 12 different brands of cigarettes to increase the size of the health warnings on their packaging by 80 percent. The resulting costs forced Philip Morris to withdraw seven of the 12 types of cigarettes that it sold in Uruguay.

The case had been watched closely by health advocates worldwide. It was feared an adverse outcome for the Uruguayan government would have been a major setback for tobacco control measures, particularly in the developing world where smoking rates are continuing to increase.

Instead, the judgement has emboldened activists and policymakers to intensify their efforts to control tobacco.

Welcoming the tribunal’s decision, Uruguayan President Tabare Vazquez said that, “we have proved before the ICSID that our country, without violating any treaty, has met its unwavering commitment to the defence of the health of its people”.

In a statement following the ruling, Philip Morris Vice President Marc Firestone said his company had “never questioned the authority of Uruguay to protect public health and this case did not address broad issues on tobacco policies”.

But the case is expected to provide a boost to plans for countries such as Canada to follow Australia in introducing tobacco plain packaging laws.

Rob Cunningham, a senior policy analyst with the Canadian Cancer Society, told CTV News that the Uruguay case provided a very useful precedent for countries like Canada because the issues raised were similar.

“The tobacco industry claims these measures are invalid, but they keep losing these cases,” Mr Cunningham said. “That’s going to provide encouragement to governments to make sure their regulations are not only adopted but they are as comprehensive as possible.”

The ICSID ruling is the latest setback for the tobacco industry in its attempts to frustrate tobacco control measures and overturn plain packaging laws.

A legal challenge to Australia’s world-first plain packaging laws was thrown out by the High Court in 2012, and last year the Permanent Court of Arbitration rejected a claim by Philip Morris Asia that the legislation impinged on investor rights under the terms of a trade deal between Australia and Hong Kong.

Uruguay’s fight to control tobacco drew international support.

The US-based Campaign for Tobacco-Free Kids established a fund to help Uruguay and other small countries to fight legal challenges to anti-smoking laws, and drew contribution from Bloomberg Philanthropies and the Bill & Melinda Gates Foundation.

“It shows countries everywhere that they can stand up to tobacco companies and win,” Bloomberg Philanthropies founder Michael Bloomberg said. “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.”

Adrian Rollins