Big tobacco, shock proposal: over $23 billion to settle lawsuit in Canada

"Big Tobacco will have to pay $23.6 billion to settle claims in Canada stemming from allegations that they have long concealed cancer and general health risks from their cigarettes. The Canadian divisions of Philip Morris, British American Tobacco and Japan Tobacco have revealed that this is the figure on the table as part of a mediation process ordered by the judiciary and which appears to be nearing completion.

The industry players had lost a colossal lawsuit in 2015. A Quebec court then ruled in favour of more than one hundred thousand victims who had argued that the companies had known since the 1950s about the diseases associated with smoking and had warned consumers. An appeals court upheld the verdict in 2019, prompting the companies to seek protection from creditors and launching the negotiation process overseen by the authorities in the hunt for a settlement.

Now, as a result of the negotiations, the damage compensation plan has arrived, which must, however, still formally go through all parties, with votes expected by December. Further talks are planned to work out the details of the payout. And final approval requires subsequent hearings before the judge: if no obstacles arise, it could be triggered by mid-2025.

The companies expressed optimism about the compromise. "Although important issues remain to be resolved, we are confident that the legal matter can be concluded soon allowing us to focus on the future," said Jacek Olkczak, the chief executive of Philip Morris' local subsidiary Rothmans, Benson & Hedges. BAT, which controls Imperial Tobacco Canada, took a similar stance. It spoke of a positive step towards a settlement of the saga and indicated that it will finance its portion of the settlement from cash reserves and proceeds from future product sales. "It resolves all tobacco-related legal challenges in Canada," it indicated in a statement.

Tobacco giants are no strangers to lengthy legal battles and huge damages. The amount at stake in Canada pales in comparison to past settlements reached in the United States. The Tobacco Master Settlement Agreement, which dates back to 1998 at the end of complaints that dragged on for years, was reached by the then four tobacco giants, Philip Morris, RJ Reynolds, Brown & Williamson and Lorillard, with 46 US states intent on recovering costs incurred by the Medicaid public health programmes. In all, it required the payment of at least 206 billion over 25 years.