On 8 July 2016, the arbitral tribunal constituted to hear Philip Morris’ challenge to Uruguay’s tobacco packaging and labelling measures under a 1988 bilateral investment treaty between Switzerland and Uruguay handed down its Award, dismissing all of Philip Morris’ claims against Uruguay’s large graphic health warnings and its ‘single presentation requirement’, a requirement that tobacco manufacturers produce no more than one variant of a single brand family of cigarettes. The Award strongly affirms the sovereign right of states to regulate in the public interest, including for public health. It emphasises the policy space that states have under international investment treaties, affirms that it is not the role of international tribunals to second-guess states’ regulatory decisions on complex public policy matters and makes a number of more general statements about evidence and approach that will be relevant to challenges in other fora.
We’ve written a paper outlining key aspects of the Award. Our paper summarises the procedural history of the dispute, distils the key findings of the Tribunal and reflects on its key findings and their implications for WHO FCTC implementation. It is principally intended as a tool to support and complement our capacity-building and technical support activities as a WHO Framework Convention on Tobacco Control (WHO FCTC) Knowledge Hub.
Our analysis identifies key aspects of the judgment that will be relevant to other governments looking to move ahead with WHO FCTC implementation. In particular, the Tribunal finds that:
Philip Morris had argued that Uruguay’s measures ‘expropriated’ its investments and denied it fair and equitable treatment (among other arguments). In dismissing Philip Morris’ arguments, the Tribunal found that:
The Tribunal interpreted the investment law standards at stake in a way that categorically affirms states’ right to regulate, finding in particular that:
While these principles have been recognised in previous investment decisions concerning health, the Tribunal’s decision is an extremely thorough statement of how they apply to tobacco control measures that will be of much interest to other states looking to move ahead with measures implementing the WHO FCTC
The Tribunal at many points stressed the importance of deference to regulatory decisions in interpreting the scope of investment treaty standards.
It also made a number of related findings on how tribunals should assess complex public health evidence. It recognised that:
Taken together, these affirm that tribunals should not be second-guessing complex public policy decisions; and that tribunals should respect good faith and non-discriminatory sovereign regulatory judgments regarding public health.
The Tribunal places significant weight on the WHO FCTC and its guidelines as ‘evidence-based’ international instruments, notably doing so even though Switzerland was not a WHO FCTC party. In particular, it noted that:
These are important findings, particularly for countries with resource limitations. The decision confirms that states are able to rely on the international consensus and evidence base that is represented by the WHO FCTC and its guidelines, including in situations where not all of its investment treaty partners may have ratified the WHO FCTC.
Finally, the Award demonstrates the many ways in which public health, as a normative value, can inform the interpretation of investment treaty standards, including in the interpretation of whether a measure is good faith, what an investor can legitimately expect a government to do, whether a measure is arbitrary, whether the police powers doctrine is applicable, and the level of deference to apply. Notably, the Tribunal placed significant weight on amicus curiae briefs by WHO/WHO FCTC and PAHO, who filed submissions in support of Uruguay, in determining whether the measures were in fact implemented for good faith public health purposes.