Tobacco giant Philip Morris has lost an international dispute surrounding the sale of cigarettes in Uruguay, President Tabare Vazquez says.
As a result, the company must continue to cover its packages sold in the South American country with graphic warning labels and restrict its branding practices.
In a televised address Vazquez said the International Center for Settlement of Investment Disputes has rejected a challenge by Philip Morris to his government's strict anti-smoking policies, calling it a victory for efforts to protect public health and his country's sovereignty.
"The health measures that we have imposed to control tobacco and protect the health of our people have been recognised as legitimate and adopted as a sovereign function of our republic," said Vazquez, an oncologist who had spearheaded the anti-smoking campaign.
Philip Morris International had challenged Uruguay's requirement that graphic warning labels cover 80 per cent of the front and back of cigarette packages and that each brand have only a single product presentation.
Philip Morris contended that Uruguay's tobacco law violated a bilateral treaty and also hurt its intellectual property rights and sales.
The US-based tribunal also ordered Philip Morris to pay Uruguay $US7 million ($A9.36 million) and reimburse other costs associated with the case.
Marc Firestone, Philip Morris International Senior Vice-President and General Counsel, said the tobacco giant would respect the arbitral tribunal's decision.
"For the last seven years we have already been complying with the regulations at issue in the case, so today's outcome doesn't change the status quo. We've never questioned Uruguay's authority to protect public health, and this case wasn't about broad issues of tobacco policy. The arbitration concerned an important, but unusual, set of facts that called for clarification under international law, which the parties have now received."
