Dec 8, 2014 - in more detail during a meeting. I am available at your earliest convenience and hope to have the privileg
Ref. Ares(2014)4115017 - 08/12/2014
PHILIP MORRIS INTERNATIONAL Ms. Cecilia Malmström European Commission B-1049 Brussels BELGIUM December 8, 2014 Dear Commissioner Malmström, I would like to congratulate you on your appointment and wish you success in your new role. As a major investor in the European economy, Philip Morris International (PMI) appreciates the opportunity to continue an open and transparent dialogue with your services on topics of mutual interest. In light of the ongoing debate about international trade and investment rules, I would like to share with you our views on some of these important topics. In particular, we witness with concern that our company has been mentioned by your services on several occasions in relation to our pending investment arbitrations against Australia and Uruguay. Given the inaccurate nature of some of these references, we would like to clarify the facts of our Investor State Dispute Settlement (ISDS) proceedings. As a highly regulated industry, we share the Commission's views that international obligations do not prevent countries from regulating in the public interest'. The long history of investment protection agreements demonstrates that the signatories of these treaties can indeed regulate while also maintaining such basic standards as equal justice and respect for private property. In the case of government-mandated packaging in Australia, there is no question that valuable property has been taken without compensation, a fact that is evident from a major decision by Australia's High Court. Consequently, PMI took the difficult decision to challenge these measures under the investment protection agreement between Hong Kong and Australia. We are convinced that we have a very strong case and that a review of the merits of this case will demonstrate Australia's violation of its international obligations. Just to be clear; we do not take the decision to challenge a governmental measure lightly. However, when a State's law or regulation deprives our company of valuable, lawful assets, we have an obligation to our shareholders to seek fair compensation. Rather than deal with the fact that plain packaging results in the uncompensated taking of valuable property, opponents of investment protection have seized upon our challenge to suggest that PMI has abused the ISDS process by initiating a challenge as a Hong Kong investor. In fact, Australia has simply adopted a strategy commonly used in arbitration by other host States and is challenging the bona fides of PM Asia
Philip Morris International Management S.A., Avenue de Rhodanie 50, 1007 Lausanne, Switzerland T:+41 (58) 242 00 00, F: +41 (58) 242 01 01, W; www.pmi.com
PHILIP MORRIS INTERNATIONAL as an investor under the investment protection agreement. Yet, the mere fact that Australia has asserted such objections does not mean that our conduct was in bad faith. Consistent with the rule of law and the terms of the investment protection agreement, the Tribunal will objectively and fairly consider Australia's procedural objections in the full light of all relevant facts. Some public reports about the case, however, are simply inaccurate. Uninformed detractors of ISDS have ignored or overlooked important facts. Specifically, Philip Morris Asia has served as PMI's headquarters for its Asia Region since 2001 (a full decade before Australia enacted its plain packaging law) and, in that role, PM Asia has exercised managerial supervision and control of the activities of PMI's Australian affiliates. In addition, PM Asia has owned PMI's Australian affiliates since 2011 nearly a year before Australia enacted its plain packaging law. There is, in short, a strong, long-standing nexus with the home State and with the impaired assets in the host State. Mischaracterizing the facts does a disservice to the important debate about the investment protection system. Indeed, the vilification of ISDS, and PMI's small part in it, seems to be contrary to the very values that the EU, Australia, Uruguay and every other responsible member of the international community strive to protect in both domestic and international law. Fundamental principles, such as non-discrimination, proportionality, fairness, and due process, are well embedded in the legal tradition that is at the core of these democracies' ideals and policy. These are values we too strongly defend and we also believe we share the Commission's views and objectives. In this sense, while tobacco may be unpopular, the value of an impartial hearing or the importance of private property protection should continue to rest on a firmer foundation than the relative popularity of an industry. 1 would appreciate the opportunity to expand upon these points and share our views in more detail during a meeting. I am available at your earliest convenience and hope to have the privilege to speak to you soon.
Best regards.
Marc S. Firestone Senior Vice President and General Counsel
1
Factsheet on Investor-State Dispute Settlement, European Commission, 3 October 2013, pg. 3. http://trade.ec.europa.eu/clQclib/docs/2013/october/tradoc 151791.pdf
Philip Morris International Management S.A., Avenue de Rhodanie 50, 1007 Lausanne, Switzerland Τ+41 (58) 242 00 00, F: +41 (58) 242 01 01, W: www.pmi.com
