## Facts

- Philip Morris Brands Sàrl and Philip Morris Products S.A. (Swiss entities) and Abal Hermanos S.A. (Uruguayan affiliate) held investments in Uruguay, including cigarette trademarks, related intellectual property, and manufacturing and marketing activities.
- Uruguay adopted tobacco-control measures as part of a broader public-health strategy and implementation of international and domestic anti-smoking policies.
- Ordinance 514 (Aug. 18, 2008) imposed a “Single Presentation Requirement,” limiting each cigarette brand family to one variant and barring multiple variants under the same brand name.
- Decree 287/009 (June 15, 2009) imposed an “80/80” packaging rule requiring health warnings and graphic images covering 80% of both the front and back of cigarette packs.
- Claimants asserted the measures reduced the value and marketing utility of their trademarks and sought damages reportedly around USD 22–25 million.
- The dispute proceeded under the Switzerland–Uruguay bilateral investment treaty and the ICSID Convention; the tribunal upheld jurisdiction and later issued an award for Uruguay.
- The tribunal dismissed all treaty claims and ordered claimants to pay USD 7 million toward Uruguay’s legal and arbitration costs, with minor non-substantive rectifications later made.

## Issues

1. Whether Uruguay’s Single Presentation Requirement and 80/80 packaging regulation constituted indirect expropriation of claimants’ trademarks or other protected investments under the BIT.
2. Whether the measures breached the BIT’s fair and equitable treatment/minimum standard of treatment obligation, including through alleged arbitrariness, disproportionality, frustration of legitimate expectations, or denial of justice in domestic litigation.
3. Whether Uruguay breached an umbrella clause or related treaty protections concerning the use and enjoyment of investments.
4. If liability existed, what compensation and cost allocation were appropriate.

## Decision

- The tribunal dismissed all claims on the merits and found no breach of the Switzerland–Uruguay BIT.
- The challenged measures were treated as bona fide, non-discriminatory public-health regulation within Uruguay’s regulatory authority.
- The tribunal held there was no indirect expropriation because claimants retained ownership and registration of trademarks and were not substantially deprived of their use or value in commerce.
- The tribunal held there was no FET/MST breach because the measures were rationally connected to public-health objectives and did not violate due process or amount to denial of justice.
- The tribunal rejected reliance on the umbrella clause to convert general regulation into treaty violations.
- Claimants were ordered to bear their own costs and to pay Uruguay USD 7 million in legal and arbitration costs.

## Legal Principles

- Non-discriminatory, good-faith public-health measures can fall within a state’s police powers and generally do not require compensation merely because they reduce profitability or limit marketing methods.
- Indirect expropriation requires a substantial deprivation of the investment’s value or ability to use it; continued ownership and the ability to use trademarks subject to regulation weighs against expropriation.
- In a heavily regulated industry, investors have limited ability to claim legitimate expectations of regulatory stability; tightening health regulation may be foreseeable.
- FET/MST is not breached by regulation that is reasoned, proportionate to a legitimate aim, and implemented with due process; disagreement with policy choices or adverse domestic outcomes does not by itself establish denial of justice.
- Umbrella clauses are not generally construed to bar ordinary exercises of regulatory authority absent a specific, enforceable commitment to the investor.

## Conclusion

The tribunal held that Uruguay’s restrictions on cigarette brand variants and its large graphic health-warning requirements were permissible public-health regulation and did not amount to indirect expropriation, unfair and inequitable treatment, or an umbrella-clause breach under the Switzerland–Uruguay BIT, and it awarded Uruguay costs.


Philip Morris Brands Sàrl v. Oriental Republic of Uruguay, ICSID (W. Bank) Case No. ARB/10/7 (Award July 8, 2016)