Key Decision on Tobacco Packaging Regulation
On July 8, 2016, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled in favor of Uruguay, ordering Philip Morris International (PMI) to cover Uruguay’s legal fees, in excess of $7 million.
A claim filed by PMI against Uruguay resulted in an ICSID arbitration panel handing over a major victory to the proponents regarding the restriction parameters in the packaging of tobacco products.
The claim was based on the argument that the Uruguayan government had violated a bilateral investment treaty with Switzerland.
The concrete treaty violation was the failure to implement measures such as increasing the size of graphic health warning appearing on cigarette cartons, tax increases, advertising bans, and barring tobacco manufacturers from promoting more than one variety of cigarette brands.
As a result of the claim, Uruguay responded that it acted in good faith, in the interest of promoting public health and in accordance with its international treaties and obligations.
The Tribunal stated that there is no “positive right to use” a trademark and that trademark owners have an exclusive right in order to prevent third parties from using the same mark in the course of trade.
The WTO panel’s decision, which is expected for next year, may determine the fate of not only packaging and trademark use on tobacco products, but of other products that become the target of health policy activists.