Japan Tobacco International rejects $32.5 billion worth of tobacco compensation due to significant uncertainty caused by settlement agreement
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Japan Tobacco International rejects $32.5 billion worth of tobacco compensation due to significant uncertainty caused by settlement agreement
JTI Canada has rejected a tobacco settlement agreement worth CAD 32.5 billion, citing key unresolved issues and potential commercial uncertainty and ambiguity. The Ontario court has extended the suspension of the lawsuit until January 31, 2025.
According to Barrons' report on October 31st, JTI Macdonald Corp has rejected an arbitration proposal worth CAD 32.5 billion (USD 23.3 billion).
The arbitration proposal aims to resolve legal disputes arising from the hazards of cigarettes, but the company expressed dissatisfaction with the proposal and rejected it. At present, the company is still in complex legal settlement negotiations with provincial governments and smokers.
In documents submitted to the Ontario Superior Court prior to the hearing, the company stated that it cannot support the agreement due to "key unresolved issues". These issues include the settlement amount and the unresolved issue of how to distribute payments among multinational companies.
The company stated in court documents that,
The agreement may introduce significant commercial uncertainty and ambiguity in the settlement application of the Canadian tobacco industry. Therefore, JTI Macdonald and its tobacco company group will not support the current form of the arbitration plan
According to the terms of the agreement, several tobacco companies will pay a total of CAD 32.5 billion (USD 23.3 billion) to end their litigation in Canada.
These companies include PMI, BAT, IMB, and JTI.
The arbitration plan will be announced on October 17th, ending all claims related to the manufacturing, marketing, sales, use, or exposure of tobacco products by these companies. The class action lawsuits against these companies and the legal efforts made by various provinces in Canada to recover medical costs will also be dismissed.
The case began in June 2015, when the Quebec High Court ordered these three manufacturers to pay billions of dollars in compensation to thousands of Quebec tobacco victims, including smokers or former smokers with emphysema, lung cancer, or throat cancer. In 2019, the order was upheld on appeal, prompting these companies to seek creditor protection. Subsequently, a court in Ontario suspended the legal proceedings as the parties sought a negotiated settlement.
On Thursday (31st), the Ontario court extended the suspension of the lawsuit until January 31, 2025.
