Background
Canada’s tobacco restructuring arose after decades of litigation involving JTI-Macdonald Corp., Rothmans, Benson & Hedges Inc., and Imperial Tobacco Canada Ltd. In the health-care recovery stream, all provinces had commenced health-care cost recovery actions, and the restructuring plans also compromised territorial claims. Separately, in the Quebec class actions, the Quebec plaintiffs had obtained a judgment that the 2025 court materials describe as approximately $13.5 billion, upheld by the Quebec Court of Appeal on March 1, 2019.
The evasion: After the Quebec appeal judgment, the three tobacco companies entered CCAA insolvency proceedings in March 2019, triggering a stay and shifting the litigation into a restructuring and settlement process. Court materials later described the broader tobacco claims as involving approximately $1 trillion in aggregate claimed liability.
Outcome
After six years of mediation, on March 6, 2025, Chief Justice Morawetz of the Ontario Superior Court sanctioned the CCAA plans. The court-approved settlement amount was CAD$32.5 billion. The plans required the tobacco companies to pay all but $750 million of their aggregate cash on hand upfront, with the balance to be paid primarily from future net after-tax income over a Contribution Period then estimated at about 20 years. The plans also included allocations of $4.119 billion for the Quebec class-action judgment, $2.521 billion for the pan-Canadian claimant compensation plan, and $1 billion for a cy-près foundation.
Implication for Article 19
Without pre-harm financial guarantees, bonds or insurance requirements, even a successful judgment can be rendered unenforceable through bankruptcy. Financial guarantees must be required before products enter the market — not after harm occurs. This is the tobacco equivalent of maritime oil pollution bonds and hazardous waste financial assurance requirements under the Basel Convention.