Legal actions between Uruguay and Philip Morris

By Pittaluga Abogados

The first arbitration hearing between Uruguay and tobacco company Philip Morris was celebrated on February in Paris. A sentence is expected for May.

During Tabaré Vázquez presidency, from 2005 to 2010, Uruguay executed a string of actions to decrease tobacco consumption, such as forcing health warnings to cover 80% of cigarette packages, and forbidding selling more than one cigarette trademark per company, cigarette advertising on media (or sponsorship of events) and smoking on public spaces. There were also tax increases on tobacco products.

Many of the measures, specially the first one, were strongly related to Intellectual Property rights, therefore on 2009 Philip Morris sued Uruguay for 2 billion dollars claiming the government was harming the company´s trademarks, restricting its brands and expropriating its Intellectual Property without compensation.

On 2010 three subsidiaries of Philip Morris, headquarrtered in Switzerland, filed for arbitration at the World Bank’s International Centre for Settlement of Investment Disputes, claiming Uruguay´s government had violated measures of the Switzerland-Uruguay Bilateral Investment Treaty (BIT) signed in 1991.

The strategy is very common in tobacco companies because bilateral treaties usually guarantee foreign investors a fair protection.