British American Tobacco and other tobacco manufacturers are facing the prospect of multibillion-dollar claims in Canada after the country's Supreme Court paved the way for lawsuits to recover the costs of treating smoking-related illnesses.
BAT's Canadian subsidiary, Imperial Tobacco Canada, vowed yesterday to "vigorously defend itself" after the ruling, saying state demands for healthcare costs were a "grotesque cash grab" and an "abuse of power".
BAT and others face claims totalling billions of pounds after the court's decision to uphold the right of the British Columbia government to seek damages for 50 years of healthcare provision. Other provinces are expected to launch similar actions and it has been estimated that claims could total more than £40bn.
The British Columbia government claims the industry hid the risks of tobacco for years and wants as much as £4.8bn in compensation from companies including Imperial Tobacco Canada, Philip Morris, the group behind the Marlboro brand, and Rothmans. The tobacco industry disputed British Columbia's right to pursue them, but the Supreme Court has upheld the state law.
Don McCarty, the vice-president of law at Imperial, said: "This case is not about tobacco and it is not about health - it is about abuse of power and a grotesque cash grab by the government. This decision means it is open season on any industry that any government decides to take on for its own benefit. Industries such as fast food, alcohol, gaming and others are now fair game."
Imperial said it does not have a "hidden vault" for state governments to loot, and a spokesman for Rothmans, Benson & Hedges said: "We don't have the resources contemplated in this lawsuit."