TRADE AGREEMENTS AND ISDS: PROTECTING PUBLIC INTEREST AND INVESTORS
October 13, 2014
Investor State Dispute Settlement (ISDS) provisions in international trade and investment agreements create a fair and transparent process, grounded in established legal principles, for resolving disputes between investors and states. Anti-tobacco organizations accuse PMI of leveraging ISDS provisions to prevent governments from passing tobacco control measures. Specifically, they claim that PMI uses its ISDS cases in Australia and Uruguay as a means to reverse tobacco regulation in those countries. A closer look at the ISDS system and PMI’s cases shows that these attacks are unfounded.
ISDS provisions in trade agreements impede governments from implementing tobacco regulations to protect public health. Some anti-tobacco organizations state that, “In recent years, tobacco companies have used trade related arguments to stall tobacco control laws in various countries like Australia, Uruguay,”¹ while some news outlets accuse PMI of launching a “legal assault” against Australia’s plain packaging law through treaties that include ISDS provisions.²
To date, no tobacco control law has been stopped because of ISDS.
ISDS provisions rest on basic principles of respect for private property and the rule of law. The protections are intended to prevent discrimination, repudiation of contracts, and expropriation of property without due process of law and just compensation.
Since ISDS was introduced more than half a century ago, only two of 568 ISDS cases involved tobacco.
Since 2010, when PMI initiated its case against Uruguay, more than 30 countries have used their powers to increase regulation of tobacco, adopting regulations ranging from bans on advertising and smoking in public to requirements for graphic, or pictorial, warnings on products.
PMI’s ISDS cases against Australia and Uruguay are about governments destroying our most valuable assets – our intellectual property. In doing so, both governments violated their pledge under binding international treaties not to deprive investors of their property without fair compensation in return:
Australia’s plain packaging policy is an unprecedented destruction of brands and breaches Australia’s treaty with Hong Kong. The Australian High Court ruling confirmedthat plain packaging is indeed a deprivation of valuable property.
Uruguay, in addition to the 80% graphic warning label requirement, introduced the irrational ban on selling more than one variant of each cigarette brand that prevents us from offering a wide range of our brands, which violates Uruguay’s treaty with Switzerland.
PMI’s cases against Australia and Uruguay are about fair compensation for the destruction of protected assets – our brands.
Find out more:
Learn more about BIT challenge of Australian plain packaging here.