Gathering limited liability

The tobacco industry has been involved in liability litigation - especially in the US - throughout most of the 1990's as litigants attempt to establish corporate liability for the damage to health caused by cigarette smoking. The 1995 proposed settlement between the US tobacco industry and the US government, where by the tobacco industry will pay $360 billion dollars over 25 years to local state authorities to cover healthcare services for smokers, was reached in return for considerably limiting the future liability of the cigarette manufacturers.

In return for this limited liability, US tobacco manufacturers agreed to an extensive package of measures, principally financial, with annual payments into a compensatory fund for settling future personal claims against liability and funding for major anti-smoking campaigns and health service programmes. The agreement, brokered by industry representatives, state attorney generals and public health representatives, involves a degree of new regulation on the industry, including advertising restrictions, increased health warnings on cigarette packets and new federal regulation - through the Food and Drug Administration - of nicotine levels in tobacco, possibly leading to a total ban on nicotine by 2009.

Essentially the agreement afforded the tobacco industry a release from the growing public sentiment and movement towards mass litigation of smokers suing tobacco manufacturers. While the sums agreed are huge, in return the tobacco manufacturers were freed from a number of legal liabilities, the first to acknowledge and apologize for past misconduct, and the second, to disclose secret documents from inside the industry.