JTI Canada has rejected a $32.5 billion cigarette settlement that claims critical unresolved issues and could lead to business uncertainty and abstraction. The Ontario Court of Justice extended the suspension of proceedings until January 31, 2025.
“Significant Uncertainty” Due to Settlement Agreement
A C $32.5 billion (US $23.3 billion) arbitration proposal from JTI-Macdonald Corp has been rejected, Barrons reported on Oct. 31.
The arbitration proposal was intended to settle legal disputes over the dangers of tobacco, but the company complained about the proposal and rejected it. At present, the company is still engaged in complex legal mediation and negotiations with the provincial government and smokers.
Day Tobacco International Rejects C$32.5 Billion Worth of Tobacco Damages
In documents filed in Ontario Superior Court ahead of the hearing. The company said the agreement could not be upheld because of “key unresolved issues.” These issues include the amount of mediation and how outstanding costs will be paid between multinational companies.
In court filings, the company said,
- In the application of mediation in the Canadian tobacco industry, significant commercial uncertainties and abstractions may be introduced. Therefore, JTI-Macdonald and its group of tobacco companies will not support the (arbitration) scheme in its current form.
Under the terms of the agreement, several tobacco companies will pay a total of C $32.5 billion ($23.3 billion) to end lawsuits in Canada.
Companies include Philip Morris International Canada (PMI). Tobacco Canada (BAT) in the United Kingdom and the United States, Imperial Tobacco Canada (IMB), and Japan Tobacco International (JTI).
The arbitration plan, announced on October 17, will end all claims related to the companies’ production, marketing, sale, use, or exposure to cigarette products. Class-action lawsuits and legal efforts by Canadian provinces to recover medical costs against the companies will also be dismissed.
The case began in June 2015. At the time, the Quebec Superior Court directed the three manufacturers to pay billions of dollars in damages to thousands of Quebec cigarette victims, including smokers or former smokers with emphysema, lung cancer, or throat cancer. In 2019, the directive was upheld on appeal to facilitate these businesses to seek debtor protection. An Ontario court then suspended the proceedings as multiple parties sought to negotiate a settlement.
On Thursday, the Ontario Court of Justice suspended the proceedings until January 31, 2025.
