VANCOUVER, Feb 21 (Reuters) - Canada's first provincial lawsuit seeking damages for smoking-related illnesses suffered a setback on Monday after a court ruled it was based on an unconstitutional law.

A British Columbia Supreme Court judge ruled that the law enacted by British Columbia to file its suit went beyond the power given to the province under the Constitution Act. The province's health ministry declined to immediately comment on the ruling until its lawyers had studied the document. The Canadian Tobacco Manufacturers' Council said it would comment on the ruling later in the day. The tobacco industry asked the court to strike down a law enacted by the British Columbia legislature that allowed the province to launch its damages suit against the industry last year. British Columbia's Tobacco Damages and Health Care Cost Recovery Act is similar to laws enacted by Florida and at least two other states, and allows it to seek retroactive damages for treating smoking related diseases. The province's lawsuit was the first in Canada and is similar to those filed by more than 40 U.S. states in the late 1990s against the cigarette industry. Ontario has also said it will seek damages, but will do so in U.S. courts. The cigarette makers argued in hearings on their constitutional challenge that because the tobacco industry was politically unpopular, British Columbia lawmakers were willing to infringe on its ability to defend itself in court. The province, with the support of national health groups, accused the cigarette makers of unfairly portraying themselves as victims of discrimination. B.C.'s suit did not ask for a specific amount in damages, but it claims smoking kills nearly 6,000 residents a year and that it spends about C$500 million per year treating diseases such as lung cancer and emphysema. The tobacco industry has attacked that damage estimate and wants the province to supply the courts with health records of all smokers rather a statistical sample to prove its case. Canada's tobacco industry has underdone a significant realignment in the past year. British American Tobacco this month completed its C$10.7 billion acquisition of Imperial Tobacco's parent, Imasco Ltd. Imperial controls nearly 70 percent of Canada's cigarette market. To win approval for the deal, BAT agreed to sell to the public its stake in Toronto-based tobacco maker Rothmans Inc., which it had acquired only a year before by buying Rothmans International. Japan Tobacco Inc. entered the Canadian market last year with its purchased RJR Nabisco Holdings Corp.'s non-U.S. tobacco business including RJR-Macdonald Corp., which is now named JTI-Macdonald Corp.

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