Via a Luke Peterson tweet, I see that Uruguay is planning to weaken its anti-tobacco law (see this old post for more), in response to a Phillip Morris investment treaty challenge:
Uruguay's government yesterday said it would tweak the legislation, or possibly draft a new law, to fend off the complaint and comply with international trade obligations.
"On some arguments, Uruguay is very strong from a legal point of view and changes aren't necessary. On other points, we need to make changes to the law or come up with a new law," the foreign affairs minister, Luis Almagro, said.
One mooted change was reducing the size of health warnings from the current 80% of a packet's size to 65%. Another was to permit the sale of "light" cigarettes.
Luke followed up his tweeting with some blogging here. He notes:
It’s not clear on what basis Uruguay has decided that its policy must be amended. According to the ICSID, the country has yet to instruct outside legal counsel. As such, it’s not clear whether the government commissioned external legal opinions (or relied on internal legal advice) following Philip Morris International’s filing of a damages claim under the Switzerland-Uruguay bilateral investment treaty.
I wonder why they were so quick to act here. Is the cost of litigating these cases just too much? Were they worried about a big judgment against them? Is there a fear that contesting this kind of case would make other companies wary of investing in Uruguay? Was the tweak to the legislation minor enough that it was not considered to be a big deal?
I would have thought they had a real chance to win. Putting aside the legal considerations, it's the kind of case where the law could end up taking a back seat to the politics and the court of public opinion. (Although I should mention that I'm not sure what the publicity rules are in the BIT in question, so perhaps Uruguay would have been limited in what it could say.)
