Tobacco firms now liable to suit in Canada

The Supreme Court of Canada ruled Thursday that the provincial government of British Columbia (B.C.) can sue cigarette companies for the cost of treating smoking-related illnesses both dating back 50 years and in the future.

The ruling could lead to a series of similar suits from other provincial governments, incurring billions of dollars of compensation from the companies and resulting in some bankruptcies.

Under a 1998 B.C. law, the provincial government can pursue damages for the public health cost of tobacco-related illnesses.

But before the B.C. government could seek file suit against the tobacco companies, members of the Canadian tobacco industry and the Canadian Tobacco Manufacturers' Council claimed the law exceeded provincial jurisdiction.

The judgment by the Supreme Court Thursday upheld the provincial government's position that its legislation was a legitimate effort to hold the industry to account for decades of misleading advertising and other actions that contributed to the spread of smoking as a health hazard.

With as much as 10 billion Canadian dollars (about 8 billion US dollars) at stake in B.C. alone, the tobacco companies see the ruling as a major setback.

It is widely expected that the other provinces will follow suit, potentially costing firms hundreds of billions in settlements.

Newfoundland has already passed a similar act which was waiting for the Supreme Court decision.

B.C. filed suit last year against three major Canadian manufacturers -- Imperial Tobacco, JTI-Macdonald and Rothmans, Benson and Hedges. Also named in the suit were the Canadian Tobacco Manufacturers' Council and nine foreign firms, including such industry heavyweights as British American Tobacco and Philip Morris.

The B.C. initiative was modeled on similar lawsuits launched by some American states against tobacco manufacturers in the 1990s. Tobacco firms eventually agreed to pay 245 billion US dollars over 25 years to defray health costs for treating smoking-related illnesses.

Health Canada estimates that it costs 4 billion Canadian dollars (3.2 billion US dollars) annually to treat tobacco-related illness. There are concerns that some of the companies may be driven into bankruptcy by the decision.

Source: Xinhua