Philip Morris v Uruguay: the tobacco packaging claim

The measures challenged

The claimants challenged two measures, as described in the award ³. The Single Presentation Requirement, set by Ordinance 514 of 18 August 2008, limited each cigarette brand to one presentation and removed variants such as Marlboro Gold and Marlboro Blue ³. The 80/80 Regulation, set by Presidential Decree 287/009 of 15 June 2009, raised health warnings from 50% to 80% of the lower part of the main sides of the pack ³.

The claimants asked that Uruguay withdraw the measures or stop applying them, with damages to the date of withdrawal ³. In the alternative they sought damages of at least US$22.267 million plus compound interest ³. The award records that the original claim was about US$25.743 million and was reduced after the first round of pleadings ³. Uruguay asked for dismissal of all claims and its costs ³.

Procedure

ICSID registered the request for arbitration on 26 March 2010, and the tribunal was constituted on 15 March 2011 ¹. Piero Bernardini was appointed President by the Secretary-General, Gary B. Born by the claimants and James R. Crawford by Uruguay ¹. Uruguay was represented by Foley Hoag and the claimants by Lalive and Sidley Austin ¹.

After a hearing in Paris on 5 and 6 February 2013, the tribunal issued its Decision on Jurisdiction on 2 July 2013 ¹. The award records that this decision upheld jurisdiction over the treaty claims and, under Article 46 of the ICSID Convention, over a denial of justice claim ³. The World Health Organization and the WHO Framework Convention on Tobacco Control Secretariat filed a written submission as non-disputing parties ^1,2. The merits hearing was held in Washington, D.C. from 19 to 29 October 2015 ¹.

The award of 8 July 2016

The tribunal rendered its award on 8 July 2016 ¹. italaw records the outcome as in favour of the respondent ². The following summary of the holdings is as reported by Martin Dietrich Brauch of IISD Investment Treaty News on 10 August 2016 ⁴.

On expropriation, the tribunal dismissed all claims ⁴. It viewed the investment as a whole and found that enough value remained after the Single Presentation Requirement, and it held that the 80/80 Regulation only limited how trademarks were used ⁴. It held that both measures were valid exercises of police power ⁴.

On fair and equitable treatment, the tribunal found the measures were not arbitrary and had a minor impact on the business ⁴. The finding on the 80/80 Regulation was unanimous and the finding on the Single Presentation Requirement was by majority ⁴. It dismissed the legitimate expectations claim, holding that only specific undertakings by the state create such expectations ⁴.

On denial of justice, the majority described conflicting decisions of Uruguay's Supreme Court and its administrative court as unusual and surprising, but found no denial of justice ⁴.

The dissent

Gary Born, appointed by the claimants, issued a concurring and dissenting opinion dated 8 July 2016 ². As reported by Brauch, he found the Single Presentation Requirement manifestly arbitrary and unreasonable, and he found that the contradictory court decisions amounted to a denial of justice ⁴.

Costs and post-award steps

As reported by Brauch, the claimants must bear the full cost of the arbitration and pay Uruguay US$7 million as partial reimbursement of its legal expenses ⁴. The claimants requested rectification of the award on 12 August 2016, and the tribunal issued its decision on rectification on 26 September 2016 ¹.

The ICSID case page lists the original proceeding and the rectification as concluded and shows no annulment proceeding ¹. No source opened for this page states whether the US$7 million costs order has been paid ^1,4.