How can Philip Morris sue Uruguay over its tobacco laws? | Alfred de Zayas

The investor-state dispute settlement puts companies’ rights ahead of human rights. Its effects are devastating for developing nations – we must abolish it

When the architects of the international order that took shape after the second world war created the United Nations, they gave the organisation a lofty goal: “Save succeeding generations from the scourge of war.” Through the UN charter – akin to a world constitution – solemnly adopted in 1945 in San Francisco, they also said they were “determined to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained”.

Since then and in line with that vow, the UN has put on the world stage not only the Universal Declaration of Human Rights, but also legally binding instruments, including 10 core human rights conventions and countless declarations and resolutions.

But now more than ever, one single mechanism – the little-known investor-state dispute settlement (ISDS) – threatens the existing system of justice, the concept of checks and balances, the very core of the rule of law. Its implications for the respect of human rights around the world are devastating. If it is allowed to continue to exist, it will hijack the dreams of a just international order born out of the second world war. It must be abolished because it undermines fundamental principles of the UN, state sovereignty, democracy and the rule of law. Far from contributing to human rights and development, the international investment regime and ISDS have resulted in growing inequality among states and within them. Article 103 of the UN charter is clear: in case of conflict between the charter and any other agreements, including ISDS, it is the UN charter that prevails.

The ISDS mechanism is a unique privatised system of arbitration, often buried in bilateral investment treaties and multilateral trade agreements (such as Nafta and TTIP). It grants an investor the right to use private dispute settlement proceedings against a foreign government, yet governments cannot sue the investors. The system is neither transparent nor accountable and often results in aberrant judgments without the possibility of appeal. Over the years, it has led to inconsistent, unpredictable and arbitrary awards contrary to national and international public order.

In 1993, a waste management business, Metalclad, sued Mexico for indirect expropriation after Mexico had adopted an ecological decree declaring the area where the company was doing business and seeking to develop a landfill to be a natural reserve. The ISDS tribunal found that the government had taken a measure tantamount to expropriation and ordered Mexico to pay $16.7m (£11m) in compensation – later reduced to $15.6m. One commentator suggested that such broad interpretations of expropriation provisions could reverse the established tenet of environmental policy that the polluters should bear the cost of their pollution rather than be paid not to pollute.

More recently, Philip Morris sued Uruguay after it adopted a number of anti-tobacco regulations with a view to implementing the 2003 World Health Organisation’s framework convention on tobacco control, aimed at tackling the health dangers posed by tobacco. A decision from the International Centre for Settlement of Investment Disputes is expected later in 2015, but the figures are telling: Philip Morris is claiming $25m in compensation from Uruguay. This is not only absurd: it gives me moral vertigo.

The last 25 years have delivered numerous examples of abuse of rights by investors and unconscionable ISDS arbitral awards, which have not only led to violations of human rights, but have had a chilling effect, deterring states from adopting necessary regulations on waste disposal or tobacco control.

There is no justification for the existence of a privatised system of dispute settlement that is neither transparent nor accountable. Investors can have their day in court before national jurisdictions, often with multiple opportunities for appeal. Investors can also rely on diplomatic protection and state-to-state dispute settlement procedures.

The ISDS cannot be reformed. It must be abolished. A peaceful, just, stable and sustainable international order cannot be ensured by the private sector, whose driving force is short-term profit.

No one should underestimate the adverse human rights impacts of free trade and investment agreements on human rights, development and democratic governance. Respect for human rights must prevail over commercial laws. It is time for the UN general assembly to convene a world conference to put human rights at the centre of the international investment regime. In this context, a binding treaty on business and human rights is long overdue.

Contributor

Alfred de Zayas

The GuardianTramp

Related Content

Article image
Philip Morris should not be interfering with Uruguay’s public health legislation | Letters
Letters: The burden of proof should be on PMI to demonstrate that it is not a legitimate public health measure to ban the advertising of tobacco and otherwise limit its sale

Letters

24, Nov, 2015 @4:24 PM

Article image
Philip Morris: we are defending our business, not attacking human rights | Letters
Letters: The implication that our case has ‘chilled’ governments from enacting tobacco control rules is erroneous

Letters

19, Nov, 2015 @5:13 PM

Article image
UN calls for suspension of TTIP talks over fears of human rights abuses
UN lawyer says tactics used by multinationals in courts outside of public jurisdiction would undermine democracy and law

Phillip Inman Economics correspondent

04, May, 2015 @4:45 PM

Philip Morris tobacco suppliers in Kazakhstan found to use child labour
The Marlboro cigarette manufacturer Philip Morris International has acknowledged "serious concerns" after activists found children as young as 10 picking tobacco in Kazakhstan

Andrew Clark in New York

14, Jul, 2010 @5:41 PM

Article image
Uruguay bows to pressure over anti-smoking law amendments
Tobacco giant Philip Morris accused of corporate bullying following government's decision to water down legislation

Rory Carroll

27, Jul, 2010 @4:53 PM

Article image
Philip Morris-sponsored articles in the Australian could breach tobacco advertising laws
Anti-smoking campaigners say the tobacco giant is using the online articles to try to weaken bans on nicotine e-cigarettes and e-juice

Amanda Meade

18, Nov, 2020 @4:30 PM

Article image
Philip Morris drew up plan for £1bn tobacco transition fund
Exclusive: firm accused of hypocrisy after talking to anti-tobacco MP about helping smokers switch products

Sarah Boseley Health editor

24, Feb, 2020 @7:00 AM

Formula 1: Philip Morris extends Ferrari deal

Philip Morris has caused more confusion over tobacco advertising by announcing that it has extended its Marlboro contract with Ferrari to 2011.

Alan Henry at Monza

05, Sep, 2005 @12:28 AM

Article image
Carlyle ups bid for inhaler firm Vectura, trumping tobacco giant Philip Morris
Offer for UK company from Marlboro cigarettes maker had alarmed medical experts

Rupert Neate

06, Aug, 2021 @4:24 PM

Article image
Tobacco companies Philip Morris and Altria in talks to reunite
Deal would merge the Marlboro maker with the parent company that sold it off a decade ago

Dominic Rushe in New York

27, Aug, 2019 @3:44 PM