I

ndonesia, which has been dubbed as the country of baby smokers because of its high rate of childhood smoking, needs to learn from Uruguay, which has succeeded in winning a landmark lawsuit against giant tobacco company Philip Morris International (PMI). The company had sued the South American country for its strict regulations on smoking.

On July 8, the World Bank’s International Center for Settlement of Investment Disputes (ICSID) ruled in favor of Uruguay, a decision that sets a precedent for other countries considering implementing similar legislation to reduce smoking.

The company sued Uruguay after it introduced two measures affecting tobacco packaging: that graphic health warnings cover at least 80 percent of a cigarette packet, and that tobacco companies adopt a single presentation for their brands —dropping “light” or “mild” descriptions for example — that could lead to smokers believing one variant was safer than another.

“It’s such a great commitment, where we’re not there yet because we only require pictorial warnings to cover 40 percent of a cigarette package, while they require 80 percent,” National Commission for Tobacco Control (Komnas PT) advisory board member Todung Mulya Lubis said.

The series of strict regulations was introduced by Uruguayan President Tabare Vazquez, an oncologist who has made the fight against tobacco one of his flagship policies. According to him, it is not acceptable to prioritize commercial considerations over the fundamental right to health and life, which he tries to protect by introducing the strict regulations.

So far, the attempt had proven to be successful as the number of smokers in Uruguay decreased to 22
percent of the population by 2014, from 35 percent in 2005. The number of young smokers also fell to 8 percent in 2014, from 23 percent in 2006.

However, PMI demanded the Uruguayan government withdraw the regulations through the lawsuit or pay US$22 million in damages.

The company argued that Uruguay had violated terms of a bilateral investment treaty with Switzerland, where its headquarters is located.

The lawsuit marked the first time a tobacco group had taken on a country in an international court.

“This case is important for the world because PMI has tried to use this international tribunal to undermine the rights of Uruguay and other countries issuing laws to protect their citizens,” Campaign for Tobacco-Free Kids president Matthew L. Myers said in Jakarta.

The court’s mechanism is a uniquely privatized system of arbitration, granting an investor the right to use private-dispute settlement proceedings against a foreign government, yet governments cannot sue investors.

Philip Morris is the world’s biggest tobacco company, whose annual revenues of more than US$80 billion across 180 countries far exceeds Uruguay’s GDP of closer to $50 billion.

“It’s clear that PMI picked on Uruguay because it thinks that the country didn’t have the resources to stand against a big company like PMI,” Myers said.

Uruguay’s victory also showed that a country protecting the health of its citizens takes priority over a tobacco company’s trading rights, he added.

“This is a major victory for the people of Uruguay and it shows countries everywhere that they can stand up to tobacco companies and win,” said former New York City mayor Michael Bloomberg, who provided financial support to Uruguay’s lawsuit.

It is not the first time a country won against a big tobacco company in court. The past six months have brought four stinging defeats to PMI and its allies.

In December 2015, the Permanent Court of Arbitration dismissed PMI’s case against Australia’s plain-packaging policy, claiming that the lawsuit is actually abuse of the international trade process. In May 2015, the British High Court also dismissed a lawsuit brought by several tobacco companies against the UK’s plain-packaging regulations. At the same time, the European Court of Justice dismissed a case brought by PMI and other tobacco companies that also challenged the rights of UK and other EU members to adopt plain packaging.

Yet, Indonesia in teaming up with Cuba, the Dominican Republic, Honduras and Ukraine, is mimicking the behavior of tobacco firms in filing a complaint to the World Trade Organization on Australia’s plain-packaging policy.

These countries argue that plain packaging is discriminatory, more trade restrictive than necessary, and unjustifiably infringes upon trademark rights.

It is claimed that PMI is covering some legal costs for Cuba and the Dominican Republic, and British American Tobacco are doing the same for both Honduras and Ukraine.