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Philip Morris International's (PMI) six year legal action against Uruguay's pictorial health warning legislation finally came to a close in July. The International Centre for Settlement of Investment Disputes (ICSID), an arbitration court of the World Bank, ruled that the country's anti-smoking laws did not violate a bilateral investment treaty between Uruguay and Switzerland. PMI's headquarters are located in Switzerland, and the case was initiated through its Swiss subsidiary. PMI was also ordered to pay US$7 million reimbursement to Uruguay for legal costs (although this falls significantly short of what has been incurred in fighting the action).

This was an important test case for the ability of governments to legislate measures that protect public health. Although the tobacco industry has used legal action to try and block laws, and perhaps more effectively, threatened legal action to deter governments from enacting effective policies, the case against Uruguay was the first time a tobacco company had taken on a national government.

It is instructive that PMI chose a country whose gross domestic product is less than PMI's annual revenue. While the legal costs for such actions run into millions of dollars, the deterrent value of dragging the country through a protracted legal stoush is likely to pay off many times over in policies delayed or shelved by other countries with much larger markets.

Two measures were challenged: the restriction on selling multiple varieties of a brand, and the increase in health warning size to cover 80% of the pack, increased from 50%.

PMI used arguments similar to those used to try and block Australia's plain packaging laws: that PMI was being denied rights to its intellectual property and that investors should be …

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