The Supreme Court of Canada refused on Thursday to exclude eight foreign tobacco companies from a lawsuit by the province of British Columbia to recover health costs linked to smoking.
The companies, based in Britain and the US, had argued they could not be held liable in British Columbia for indirect cigarette sales, because they did not have offices or factories in the province.
They claimed "any alleged wrong occurred outside the jurisdiction" and "that there is a lack of any real and substantial connection to British Columbia."
But the high court dismissed their appeal to quash the case.
The suit could cost R.J. Reynolds Tobacco Co, R.J. Reynolds Tobacco International Inc, BAT Industries Plc, British American Tobacco (Investments) Ltd, Carreras Rothmans Ltd, Ryesekks Plc, Philip Morris International Inc and Philip Morris Inc billions of dollars.
British Columbia adopted a law in 2000 to facilitate the litigation, inspired by multibillion dollar settlements with tobacco companies in the US.
The provincial government sued 14 tobacco firms in total.
The Supreme Court had already ruled in 2005 that the lawsuit could proceed despite objections by Canadian cigarette makers that the legislation was unconstitutional because it "did not respect territorial limits."
The province, however, must still prove in court that smoking causes disease and that the tobacco companies failed to adequately warn smokers of the risks and misrepresented their product.
In the US, tobacco companies agreed in 1997 and 1998 to pay state governments US$245 billion over 25 years.
Several other provinces are considering similar laws and planning lawsuits that are likely to take several years to prosecute.
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