January 14, 2003

EC Court's decision will not revive Commission's rejected U.S. lawsuit: PMI will nevertheless appeal EC Court's decision

The European Court of First Instance in Luxembourg today refused to hear a lawsuit brought by Philip Morris International ("Philip Morris") challenging the European Commission's decision to use a U.S. court to seek damages based on cigarette smuggling in Europe.

Today's decision relates to the Commission's U.S. lawsuit, which was dismissed in February 2002 on the ground that U.S. law prohibits foreign governments from using U.S. courts to recover their own lost taxes. Philip Morris has maintained its lawsuit in the Court of First Instance because the Commission is appealing the dismissal of its U.S. lawsuit.

Philip Morris contended in the Court of First Instance that the European Commission lacked standing to institute a lawsuit on behalf of itself and a number of European Community member states for lost taxes. The Commission argued, and the court agreed, that the Commission's decision to file the now-dismissed lawsuit in the United States did not, in and of itself, produce "binding legal effects" on Philip Morris or "substantively alter the rights and obligations of the parties concerned."

Philip Morris will now appeal the decision to the European Court of Justice.

"We continue to believe that the Commission's decision to pursue an action in the U.S. courts was not only bad public policy, but also contrary to the law. We are confident that the European Court of Justice will agree that this type of claim is not appropriately brought in a U.S. court," stated Even Hurwitz, Vice President and Associate General Counsel of Philip Morris International. "It is bad policy to surrender control of important European policy issues to U.S. plaintiffs' lawyers in courts an ocean away."

The Commission's U.S. lawsuit has already been dismissed twice and is currently on appeal. The lawsuit was first dismissed last year on the ground that the Commission had suffered no financial injury. The Commission's second lawsuit, which was also brought on behalf of several European Community member states, was dismissed in February 2002 on the additional ground that foreign governments seeking to recover their own taxes must proceed under their own legal systems or under treaties negotiated with the American government, not in U.S. courts.

Notwithstanding the parties' legal dispute, Philip Morris remains dedicated to pursuing its long-held policy of addressing the contraband challenge by working together with interested governments throughout the world.

"We have said from the outset of this and similar suits that we would like to work with governments to address the problem of contraband and counterfeit cigarettes through cooperation rather than litigation," Hurwitz added.

"We remain willing and ready to discuss the concrete steps that we have taken - and additional ones that can be taken with the collaboration of committed governments - to reduce, and hopefully eliminate, the problem."

About philip morris international inc.

PMI is the world’s leading international tobacco company, with six ot the world’s top 15 international brands and products sold in more than 180 markets. In addition to the manufacture and sale of cigarettes, including Marlboro, the number one global cigarette brand, and other tobacco products, PMI is engaged in the developement and commercialization of Reduced-Risk Products (RRPs). RRPs is the term PMI uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Through multidisciplinary capabalities in product development, state-of-the-art facilities, and indusrty-leading scientific substantiation, PMI aims to provide an RRP portfolio that meets a broad spectrum of adult smoker preferences and rigorous regulatory requirements.

For more information

See pmi.com and pmiscience.com

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