How much does ISDS litigation on tobacco regulation cost? And who has to pay?
This was from the Philip Morris v. Uruguay tribunal:
588. In view of the outcome of the case and the significant disproportion between the Parties’ respective costs, the Tribunal deems it fair and reasonable that the costs of the proceedings be paid by the Parties as follows: each Party shall bear its own costs but the Claimants shall reimburse the Respondent for part of the latter’s costs in the amount of US$ 7,000,000.00 and, in addition, pay all fees and expenses of the Tribunal and ICSID’s administrative fees and expenses.
And here's an explanation of that award:
At eight paragraphs out of an award that exceeded 76 pages (not including the 45-page dissent), the tribunal’s analysis of costs is a study in brevity. Philip Morris’s costs were about $17 million, Uruguay’s slightly over $10 million, and the arbitration and administrative fees totaled $1.5 million. The tribunal ultimately opted for a “loser pays” approach, requiring Philip Morris to cover the vast majority — $7 million — of Uruguay’s expenses, and all $1.5 million of the arbitration costs, for a total cost allocation award of $8.5 million, on top of Philip Morris own costs of $17 million that had already been spent to pursue the arbitration.
Despite the magnitude of this cost award, the tribunal provided little explanation of its bases. The tribunal cited in passing “the significant disproportion between the Parties’ respective costs,” the fact that the total costs exceeded the amount Philip Morris had sought in the arbitration ($22 million plus interest), and the fact that Philip Morris’s merits claims had been “substantially rejected.” “On balance,” the tribunal concluded, “the outcome of the case has favored the Respondent to a large extent.” Thus, the tribunal said, it was “fair and reasonable” for Philip Morris to bear the bulk of the costs.
Compare that with the Philip Morris v. Australia case:
Why are the figures all blacked out? Over at IAReporter, Jarrod Hepburn had this to say:
It is highly unusual for a tribunal to redact such basic costs information – presumably in response to a demand of one or both parties – before the award is published. The upshot of this is that the Australian taxpayer will bear some of the costs of this case, without being permitted to know the extent of this outlay.
In terms of the amounts involved, the media reported the following:
Tobacco giant Philip Morris has been ordered to pay the Australian government millions of dollars in legal costs after its failed bid to kill off plain packaging laws.
While the exact figure is a closely-guarded secret - and is redacted from the Permanent Court of Arbitration's new ruling - it's believed the bill could be as high as $50 million.
Anyway, in both cases, Philip Morris lost, and had to pay money to the governments it sued. The reported figures sound like a lot of money to me, but it may not be all that much for Philip Morris.
(On the other side of things, perhaps it works out well for governments when they can win the case and get reimbursed. It means their lawyers get trained without charging taxpayers the full amount!)
