The Recent Philip Morris v. Uruguay Decision

The Philip Morris v. Uruguay case pending before the International Centre for Settlement of Investment Disputes ("ICSID") has been recently decided in favor of Uruguay, the Respondent. This lawsuit, filed by Philip Morris, was decided by the arbitral tribunal that was constituted by Piero Bernardini (Chairman), Gary Born (co-arbitrator appointed by the Claimant), and James Crawford (co-arbitrator appointed by the Respondent), on July 8, 2016.

This case is important, not only because it represents the first time that a tobacco company sued a sovereign state before an international forum, but also because it concerns very important issues, such as the limits of the regulations setting forth restrictions in the tobacco industry.

The relevant decision shall be analyzed in this article.

In General

In this case, the Claimants are Philip Morris Brand Sàrl (Switzerland) ("PMB"), Philip Morris Products S.A. (Switzerland) ("PMP"), and Abal Hermanos S.A. (Uruguay) ("Abal") (jointly referred to as the "Claimants"). PMB and PMP are companies which are both seated in Neuchâtel, Switzerland, while Abal is organized under the laws of Uruguay, and has its registered office in Montevideo, Uruguay, whose shares are directly owned by PMB. The Respondent is the Oriental Republic of Uruguay.

The claims are based on the Agreement between the Swiss Confederation and the Oriental Republic of Uruguay on the Reciprocal Promotion and Protection of Investments, dated 7 October 1988 ("BIT"), which entered into force on 22 April 1991.

The request pertaining to this case was registered by the Secretary General of ICSID on March 26, 2010, and the arbitral tribunal was constituted on March 15, 2011. Accordingly, the case has been pending for more than six years.

The core of the claims of the Claimants pertain to allegations that Uruguay violated the BIT in its treatment of the trademarks associated with cigarette brands in which the Claimants had invested, by implementing strict tobacco-control measures regulating the tobacco industry. These measures shall be further explained, below.

The Measures Challenged by the Claimants

In this lawsuit, the Claimants challenged two measures adopted by Uruguay. The first measure, called the single presentation requirement, sets forth that tobacco manufacturers may only market one variant of cigarette per brand family. Accordingly, each cigarette brand should have a single presentation, and different packaging or variants for cigarettes...