US Court reopens the case of the EU against the American giant of tobacco accused of smuggling

The battle of the EU against the American giant of Tobacco, Reynolds American Inc., producer of Camel and Pall Mall cigarettes, accused of being involved into tobacco smuggling and of having planned a scheme for money laundering (with the active involvement of crime organizations) can be re-started. The case, started more than ten years ago, was reopened thanks to the decision of the U.S. Court of Appeals for the Second Circuit of New York, which established that the EU and the 26 Member States may bring on the case.

This fight is particularly important for the Union – given that tobacco smuggling has an estimated cost of €10bn a year for European markets. “I warmly welcome this decision by the US Court,” said Algirdas Šemeta, EU anti-fraud Commissioner, “It is an important step forward for the EU in its quest to combat the illicit tobacco trade, and protect its citizens and its financial interests.”

The EU civil action was commenced in 2002 with the target, as explained at the time, of obtaining “enforceable equitable relief” and compelling RJR “to adopt the same standards of corporate conduct already embraced by other multinational tobacco companies, by cooperation agreements with the EU and all of its Member States.” The group is in fact the only major multinational tobacco manufacturer that has not entered into a cooperation agreement with the EU and Member States. The EU and Member States have already concluded cooperation agreements with Philip Morris International, Japan Tobacco International, British American Tobacco and Imperial Tobacco Limited.

Yet, in 2011 the US District Court dismissed the EU’ and Member States’ claims for “technical reasons” explaining that laws against racket do not apply out of the US territory. A decision which was vacated in the latest Court decision, which has decided to reopen the case, remanding the case to the US District Court for further proceedings.