Uruguay Wins Case Against Tobacco Company Philip Morris

An international arbitrator Friday ordered tobacco company Philip Morris to pay Uruguay $7 million in damages and court costs after losing a lawsuit that challenged government anti-smoking policies.

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The International Centre for the Settlement of Investment Disputes (ICSID), an arm of the World Bank, ruled that the Swiss-based tobacco-manufacturer had failed to prove that Uruguray had violated the terms of its 1998 Bilateral Investment Treaty in approving a ban on smoking in enclosed spaces, higher cigarette taxes and warning labels between 2005 and 2010. This lawsuit represented the first time a tobacco company had sued a sovereign state before an international forum.

"We have proved before the ICSID that our country, without violating any treaty, has met its unwavering commitment to the defense of the health of its people," said Uruguayan president Tabare Vazquez, during a televised broadcast.

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In enforcing the laws, government officials ordered a review of each of the 12 brands of cigarettes sold in Uruguay and required the manufacturer to increase the size of the health warnings on cigarette packaging by 80 percent. The resulting costs forced Philip Morris to withdraw seven of the 12 types of cigarettes that it sold on the Uruguayan the market.

But in their defense, lawyers for Uruguay cited sceintific studies which showed a correllation between smoking and a 15 percent increase in cancer cases in the country, making it an "addictive chronic disease." 

"This position is shared by the World Health Organization and its Framework Convention on Tobacco Control, as well as the Pan American Health Organization and international scientific and medical institutions," Vazquez said.

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Uruguay lawmakers approved the legislation during Vasquez's first term in office. 

Philip Morris Vice-President P, Marc Firestone said after the ruling that his company intends to meet with Uruguayan authorities to address tobacco control in the country.

"We have never questioned the authority of Uruguay to protect public health and this case did not address broad issues on tobacco policies," Firestone said in a statement.