Tobacco firms to pay $23.6bn in proposed Canada settlement

Three of the world's biggest cigarette companies are nearing a deal that would end a decades-long fight in Canada to hold the firms to account for hiding the health risks of tobacco.

Philip Morris, British American Tobacco and Japan Tobacco would pay C$32.5bn (£18bn; $23.6bn) to smokers and health departments in Canada under the terms of a settlement put forward by a court mediator.

The proposal comes nearly 10 years after a Quebec court in 2015 ruled that the companies were long aware of the links between cigarettes and cancer but failed to warn their customers.

The landmark decision led the companies to place their Canadian operations in bankruptcy, kicking off years of negotiations.

How much each company must pay is still being discussed, according to Philip Morris.

"Although important issues with the plan remain to be resolved, we are hopeful that this legal process will soon conclude," said Jacek Olczak, chief executive of Philip Morris, which operates in Canada under the name Rothmans, Benson & Hedges.

In announcing the deal, the Quebec Council on Tobacco & Health said, if approved, it will mark the first time globally that litigation against Big Tobacco has resulted in direct compensation for victims.

The proposal sends roughly $C6.5bn directly to smokers and their heirs hit by illnesses such as lung or throat cancer, reserving roughly $C4bn for victims in Quebec who first brought the suits.

That amounts to awards of up to C$100,000 per person, depending on the illness and where and when the person started smoking.

Government health departments would also receive about $C24bn in funds over time.

Smokers and ex-smokers had filed suit against the cigarette-makers in 1998.

A Quebec court in 2015 ordered the companies to pay damages of about C$15bn, a decision that was upheld in 2019.

Philip Morris said that voting on the plan would happen in December this year and if accepted by claimants, a hearing to consider approval of the plan would then be expected in the first half of next year.

Trudel Johnston & Lespérance, a law firm that represents some of the claimants, notified clients of the update saying they are confident that almost all creditors will vote in favor of its adoption.

Some advocacy groups said they were disappointed by the result, warning it would do little to change corporate behaviour and help public health.

"The settlement provides no roadmap aimed at preventing these very same companies from causing more damage by recruiting new victims, including through new enticing nicotine gadgets," Smoking & Health, Physicians for a Smoke-Free Canada and the Quebec Coalition for Tobacco Control said in a joint statement.

The groups called the compensation for victims the "only positive component of this deal".