Smurfit Westrock plcSW
Smurfit Westrock plc Commitments Disclosure
21. Commitments and Contingencies
We have financial commitments and obligations that arise in the ordinary course of our business. These include debt (discussed in
“Note 15. Debt”), lease obligations (discussed in “Note 13. Leases”), pension liabilities (discussed in “Note 19. Retirement Plans and
Deferred Compensation Arrangements”) and capital commitments, purchase commitments and certain legal proceedings are discussed
below.
Capital Commitments
Estimated costs for future purchases of Property, plant and equipment that we are obligated to purchase as of December 31, 2025, are
$1,149 million.
Purchase Commitments
In the table below, we set forth our enforceable and legally binding purchase obligations as of December 31, 2025, excluding the
capital commitments disclosed above. These obligations relate to various purchase agreements for items such as minimum amounts of
energy, supplies (including fiber, wood, and chemicals), transport and software licensing over periods generally ranging from one year
to seven years. Some of the amounts are based on management’s estimates and assumptions about these obligations, including their
duration, the possibility of renewal, anticipated actions by third parties, and other factors. Because these estimates and assumptions are
necessarily subjective, our actual payments may vary from those reflected in the table. Total purchase commitments are as follows:
Year ended December 31, | Total | |
2026 | $609 | |
2027 | 263 | |
2028 | 159 | |
2029 | 77 | |
2030 | 65 | |
Thereafter | 109 | |
Total | $1,282 |
Brazil Tax Liability
Our subsidiary, WestRock, is challenging claims by the Brazil Federal Revenue Department that we underpaid taxes as a result of
amortization of goodwill generated by the 2002 merger of two of its Brazilian subsidiaries. The matter has proceeded through the
Brazil Administrative Council of Tax Appeals (“CARF”) principally in two proceedings, covering tax years 2003 to 2008 and 2009 to
2012. WestRock was assessed additional taxes, penalties, and interest in both CARF proceedings. In the proceeding for the tax years
2003 to 2008, WestRock was also assessed penalties and interest for fraud, but WestRock won the fraud claim in the proceeding for
the tax years 2009 to 2012. WestRock subsequently filed two lawsuits in Brazilian federal courts seeking annulment of the adverse
CARF decisions. In February 2025, the federal court adjudicating the WestRock challenge to CARF's decision against WestRock for
the 2003 and 2008 period issued a ruling in favor of WestRock nullifying the financial assessments in that case. The decision of the
federal court was appealed by the tax authorities.
We assert that we have no liability in these matters. The total amount in dispute in the two cases before CARF and in the annulment
actions relating to the claimed tax deficiency was R$790 million ($144 million) as of December 31, 2025, including various penalties
and interest. Resolution of the tax positions could have a material adverse effect on our cash flows and results of operations or
materially benefit our results of operations in future periods depending upon their ultimate resolution.
Asbestos-Related Litigation
We have been named as a defendant in asbestos-related personal injury litigation, primarily in relation to the historical operations of
certain companies acquired by the Company. To date, the costs resulting from the litigation, including settlement costs, have not been
significant. We accrue for the estimated value of pending claims and litigation costs using historical claims information, as well as the
estimated value of future claims based on our historical claims experience. As of December 31, 2025, there were approximately 720
such lawsuits. We believe that we have substantial insurance coverage, subject to applicable deductibles and policy limits, with respect
to asbestos claims. We also believe we have valid defenses to these asbestos-related personal injury claims and intend to continue to
contest these matters vigorously. Should the Company’s litigation profile change substantially, or if there are adverse developments in
applicable law, it is possible that the Company could incur significantly more costs resolving these cases. We record asbestos-related
insurance recoveries that are deemed probable. In assessing the probability of insurance recovery, we make judgments concerning
insurance coverage that we believe are reasonable and consistent with our historical dealings and our knowledge of any pertinent
solvency issues surrounding the insurers. The Company currently does not expect the resolution of pending asbestos litigation and
proceedings to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. As of
December 31, 2025, the Company had estimated liabilities in respect of these matters of $82 million and estimated insurance
recoveries of $50 million.
Environmental Contingencies
The Company is subject to a variety of environmental laws and regulations.
The Company has recorded aggregate accruals of $67 million and $14 million on an undiscounted basis at December 31, 2025 and
2024, respectively, relating to environmental matters including remediation of environmental conditions in connection with some of
our current or former facilities, as well as third-party owned sites. The change in liability from 2024 to 2025 primarily reflects an
adjustment to the provisional amount recognized in the Combination with an offsetting credit to goodwill.
Liabilities recorded for environmental contingencies are estimates of the probable costs based upon available information and these
estimates may change. However, the Company does not believe that its potential environmental obligations will have a material
adverse effect upon its liquidity, results of operations, or financial condition.
Italian Competition Authority Investigation
In August 2019, the Italian Competition Authority (the “AGCM”) notified approximately 30 companies, of which Smurfit Kappa
Italia, a subsidiary of Smurfit Westrock, was one, that an investigation had found the companies to have engaged in anti-competitive
practices, in relation to which the AGCM levied a fine of approximately $138 million on Smurfit Kappa Italia, which was paid in
2021.
In October 2019, Smurfit Kappa Italia appealed the AGCM’s decision to the First Administrative Court of Appeal (TAR Lazio),
however Smurfit Kappa Italia was later notified that this appeal had been unsuccessful. In September 2021, Smurfit Kappa Italia filed
a further appeal to the Council of State which published its ruling in February 2023. While some grounds of appeal were dismissed,
the Council of State upheld Smurfit Kappa Italia’s arguments regarding the quantification of the fine. As a result, the AGCM was
directed to recalculate Smurfit Kappa Italia’s fine. On March 7, 2024, the AGCM notified Smurfit Kappa Italia that its fine had been
reduced by approximately $18 million. Smurfit Kappa Italia has appealed the amount of this reduction and a decision on that appeal is
expected in the second quarter of 2026.
Separate to these proceedings regarding the fine, in May 2023, Smurfit Kappa Italia filed an application with the Council of State for
revocation of the February 2023 ruling to the extent that it failed to consider certain pleas that had been raised by Smurfit Kappa Italia
on appeal. That application was rejected in July 2025.
After publication of the AGCM’s August 2019 decision, a number of purchasers of corrugated sheets and boxes initiated litigation
proceedings against Smurfit Kappa companies, alleging that they were harmed by the alleged anti-competitive practices and seeking
damages. In addition, other parties have threatened litigation against Smurfit Westrock seeking damages (either specified or
unspecified). The Company believes it has significant defenses to the damages claims and intends to vigorously defend the current and
any future litigation.
International Arbitration Against Venezuela
Smurfit Kappa, which is now a subsidiary of Smurfit Westrock, announced in 2018 that due to the Government of Venezuela’s
measures, Smurfit Kappa no longer exercised control over the business of Smurfit Kappa Carton de Venezuela. Smurfit Kappa’s
Venezuelan operations were therefore deconsolidated in the third quarter of 2018. Later that year, Smurfit Kappa’s wholly-owned
subsidiary, Smurfit Holdings BV, filed an international arbitration claim against the Bolivarian Republic of Venezuela before the
World Bank’s International Center for Settlement of Investment Disputes (“ICSID”) seeking compensation for Venezuela’s unlawful
seizure of its Venezuelan business as well as for other arbitrary, inconsistent and disproportionate State measures that destroyed the
value of its investments in Venezuela. Following the exchange of written submissions, an oral hearing was held in September 2022 in
Paris.
On August 28, 2024, upon the completion of its deliberations, the arbitral tribunal issued an award granting Smurfit Holdings BV,
then a wholly-owned subsidiary of Smurfit Westrock, compensation in excess of $469 million, plus legal costs of $5 million, plus
interest from May 31, 2024, until the date of payment (the “Award”). In September 2024, Smurfit Holdings BV initiated proceedings
against the Bolivarian Republic of Venezuela to enforce the Award. In December 2024, the Bolivarian Republic of Venezuela applied
to ICSID to annul the Award. An Annulment Committee has been formed by ICSID to decide on this application and an oral hearing
has been scheduled for March 2026.
U.S. Antitrust Violations Class Action
On July 29, 2025, Smurfit Westrock plc, Smurfit Kappa North America LLC, WestRock CP, LLC and seven other industry
participants were named as defendants in a class action lawsuit filed in the U.S. District Court for the Northern District of Illinois
alleging violations of U.S. antitrust laws. The lawsuit alleges violations of Sections 1 and 3 of the Sherman Act, asserting that the
defendants conspired to fix, raise and maintain supracompetitive prices for containerboard sheets, linerboard sheets, and finished
packaging products made from containerboard and/or linerboard in the United States. The complaint seeks damages, including treble
damages under the Clayton Act, pre- and post-judgment interest, injunctive relief and litigation expenses and attorneys’ fees. The
Company believes that it has substantial defenses and intends to vigorously defend against the lawsuit. While the Company is
currently unable to determine the ultimate outcome of this matter or estimate the range of potential loss due to the early stage of this
proceeding, it is possible that an adverse outcome could have a material impact on its financial condition, results of operations, or cash
flows. On October 17, 2025, the plaintiff voluntarily dismissed Smurfit Westrock plc from the lawsuit without prejudice to seek to
rejoin it at a later date. The Company’s subsidiaries Smurfit Kappa North America LLC and WestRock CP, LLC remain defendants in
the lawsuit. On January 20, 2026, the Company completed briefing the court on its motion to dismiss the complaint, which was filed
on October 20, 2025. The Company expects the court to rule on the motion to dismiss in 2026.
Other Litigation
We are a defendant in a number of other lawsuits and claims arising out of the conduct of our business. While the ultimate results of
such suits or other proceedings against us cannot be predicted as of the date of this Annual Report on Form 10-K, we believe the
resolution of these other matters will not have a material adverse effect on our results of operations, financial condition or cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.