Respecting regulatory measures: Arbitral method and reasoning in the Philip Morris v Uruguay tobacco plain packaging case

• Published date: 01 November 2017
• DOI: http://doi.org/10.1111/reel.12217
• Author: Caroline E. Foster
• Date: 01 November 2017

RECIEL. 2017;26:287–297.

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wileyonlinelibrary.com/journal/reel

DOI: 10.1111/reel.12217

CASE NOTE

Respecting regulatory measures: Arbitral method and reasoning

in the Philip Morris v Uruguay tobacco plain packaging case

Caroline E. Foster

© 2017 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

Correspondence

Email: c.foster@auckland.ac.nzThe decision in the Philip Morris v Uruguay tobacco plain packaging case is important not

only for its contribution in the health field but also more broadly for international environ-

mental lawyers in light of the methodologies employed by the majority. The Philip Morris

v Uruguay tribunal’s willingness to place weight on international health law, embodying an

openness to international law from beyond the investment field, was crucial to the deci-

sion. Additionally, the tribunal demonstrated a vital preparedness to engage with the sci-

entific or technical question of whether Uruguay’s tobacco measures would actually

potentially be effective in reducing smoking, while accepting the inherent limitations in

the available science. Notions of deference and margin of appreciation, as well as dispro-

portionality or proportionality testing, may have eased the way for the majority decision,

but were less crucial and ought not to be over- emphasized. Indeed, where there is broad

international legal support for host States’ policies, it weakens international public policy

to rest respect for States’ policies simply on a broad notion of deference or ‘margin of

appreciation’. The Philip Morris v Uruguay tribunal was right to turn instead to interna-

tional health law and the technical evidence on countering tobacco- related disease.

1 | INTRODUCTION

Philip Morris’ challenge to Uruguay’s plain packaging scheme for to-

bacco products under the Switzerland–Uruguay bilateral investment

treaty (BIT) was rejected by an International Centre for Settlement of

Investment Disputes (ICSID) tribunal in 2016.1 Central aspects of

the Philip Morris v Uruguay tribunal’s method and reasoning could

lead the way for similar cases arising in investment tribunals or inter-

national dispute settlement in the environmental arena more gener-

ally. As institutional developments in the investment field progress

and ‘investment and environment’ and ‘health and investment’ dis-

putes continue to grow in number, questions about how tribunals go

about deciding such cases require ongoing consideration.2 Most

notably, the Philip Morris v Uruguay tribunal modelled good practice

in drawing on international health law and expertise from the World

Health Organization (WHO) and the Framework Convention on

Tobacco Control (FCTC).3 With the European Union (EU) continuing

to work towards the establishment of an International Investment

Court,4 it may become increasingly important to dovetail investment

law appropriately with international public policy in the environmen-

tal and health fields, as the tribunal did in this case.5

Investment disputes raising health and environmental questions

pose a range of methodological challenges and choices for tribunals.

1Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v Oriental Republic

of Uruguay (Award) (8 July 2016) ICSID Case No ARB/10/7.

2See JE Viñuales, Foreign Investment and the Environment in International Law (Cambridge

University Press 2012); V Vadi, Public Health in International Investment Law and Arbitration

(Routledge 2012); M Cordonier Segger, MW Gehring and AP Newcombe, Sustainable

Development in World Investment Law (Kluwer 2010).

3World Health Organization Framework Convention on Tobacco Control (adopted 21 May

2003, entered into force 27 February 2005) 2302 UNTS 166 (WHO FCTC).

4Note the unanimous adoption of a mandate for a working group to assess proposed reforms

and recommend relevant solutions at the 50th session of the United Nations Commission on

International Trade Law (UNCITRAL) in Vienna, 3–21 July 2017. See UNCITRAL ‘Possible

Future Work in the Field of Dispute Settlement: Reforms of Investor–State Dispute

Settlement (ISDS)’ UN Doc A/CN.9/917 (20 April 2017).

5Consider the questions raised in AF Lowenfeld, ‘Public Policy and Private Arbitrators: Who

Elected Us and What are We Supposed to Do?’ (2006) 3(5) Transnational Dispute

Management.