About

Editor’s note: This interview was conducted prior to March 2020.

What are the most important transactions and litigations that you have been involved in during the last two years?

I am involved in the defence of JTI in a number of smoking and health related class actions and health care cost recovery suits brought by the Canadian provincial governments. These cases, in which more than C$600bn in damages have been claimed against the tobacco industry in Canada, have led to JTI and the two other major Canadian tobacco companies being forced to file for protection from creditors under the Companies Creditors’ Arrangement Act. This has been described by the Ontario Superior Court as “one of the most complicated legal undertakings in Canadian history”.

How do you suggest in-house lawyers build strong relationships with business partners within their company?

I believe the key is to ensure we take time to understand the business and the commercial objectives, and to really listen to what your business partners are trying to achieve, both in the short term and the long term – and both in their roles and as individuals. It can be easy to think that legal knows best, but that is not often the case. Through listening and open communication and dialogue we can work to understand each other’s perspectives, communicate in the right way, and come to the right decision.

What techniques do you use to provide commercially-focused advice to your company, and how do you communicate these to more junior lawyers in the team?

At JTI we have a strong focus on trying to find legally compliant solutions to commercial problems, and have been trying more and more to ensure that we strike the right balance in terms of risk. It is easy for lawyers to be risk averse, since if we say “yes” to a proposal and there is some adverse consequence in the future, there is a fear that legal will be blamed for having said yes to it. I try to instil in more junior members of my team that, most of the time, the decision on whether to proceed with a project, proposal or idea is not a decision for legal to take – rather it is a decision for the business partner whose project, proposal or idea it is, or a decision for us to reach together. The key then is to ensure that we give our business partners the advice they need, in the right format, to allow a decision to be reached. The format of our advice might depend on who the recipient is – is it someone who will want to read a long email going through the analysis (unusual) or someone who wants something as concise as possible. This will normally include outlining the risks as well as a view from legal as to whether such risks are reasonable (or not) to take in the circumstances. I find this approach normally prevents us from being seen as too risk averse, allows the business to take risks with its eyes open, while also giving the business partner the comfort they need to proceed and ensuring that everything we do is in compliance with all applicable regulations.

FOCUS ON: THE SECTOR

The biggest change currently affecting the specific sector JTI operates in relates to the regulation of “vapour” products. It is of course a niche area, but the manner in which regulations are being adopted may be of broader interest. When e-cigarettes first started appearing on the market around 10 years ago, Canada took a cautious approach, with Health Canada deeming any nicotine-containing products to be unlawful unless formally approved, which no nicotine-containing e-cigarettes were. This did not stop vape stores from proliferating across the country.

Over time, a consensus appeared to grow that while not without risk, nicotine-containing vapour products are probably less risky than smoking. Indeed, Public Health England regards them as 95% safer than smoking and Health Canada views the products as less harmful than smoking. As a result, the category was formally legalised in May 2018 under the Tobacco and Vaping Products Act. However, during 2019 two new developments began to cast doubt on the regulatory approach: An increase in youth vaping and a number of vaping related illnesses and deaths being reported, primarily in the US, but also in Canada. Although the exact cause of the vaping related illnesses is still unknown, in December 2019, the U.S. Centers for Disease Control (CDC) confirmed vitamin E acetate as a chemical of concern in connection with the vaping illnesses. This additive has been associated with black-market tetrahydrocannabinol (THC) vaping products and is never used in the federally permitted nicotine vapes sold in Canada.

Despite Health Canada moving to increase regulations around advertising, promotion and labelling of vape products, and the acute illnesses being linked primarily to black market products, these issues have led to provinces introducing their own legislation in a number of areas, including product labelling, nicotine concentration and flavours. Although the intentions behind such moves are good – to reduce youth vaping and reduce risks – there is a real risk that there will be negative impacts. Banning certain flavours or nicotine strengths may well lead consumers to turn to the illicit market to purchase vape products, where there are no regulatory standards at all. In this case consumers might be more likely to be purchasing products that have led to serious health issues through the use of unregulated and unsafe additives.

The approach could also undermine the ability of businesses to sell products across Canada. To bring a product to market in Canada already requires companies to ensure that they comply with specific rules around labelling and product safety, but for the most part, once a product is in compliance with Canadian law, it can be sold across the country. If producers need to produce different products for each Canadian province, it is likely that some producers will not make products available in certain provinces, or will simply be unable to make products for Canada at all in an economically viable way. Again, this might have the impact of pushing consumers into the illicit market (if no legitimate products are available). Even if that does not happen, it is likely to reduce consumer choice.

The regulatory developments in the vaping sector demonstrate a need for more coordination between provinces, and the federal government to ensure that Canada functions as an efficient marketplace for business, while ensuring adequate and consistent regulatory protection for consumers across the country.