AUGUSTA — An arbitration panel of retired federal judges has rejected efforts by tobacco companies to reclaim nearly $50 million owed to the state under a landmark 1998 settlement.

The decision, handed down on Wednesday, was applauded by Maine Attorney General Janet Mills.

“This is a big win for the people of the state of Maine who continue to pay the price due to the deceptive practices of the tobacco companies,” Mills said in a statement Thursday. “Every year in Maine, thousands of adults will die from tobacco use and thousands more – including kids – will get sick from tobacco-related illnesses.”

The Tobacco Master Settlement Agreement, signed in 1998, awarded Maine and 47 other states perpetual annual cash payments from tobacco companies in exchange for the state dropping lawsuits.

Five years later, in 2003, tobacco companies started to withhold portions of payments to Maine and other states on the basis that the states were not enforcing laws against tobacco companies that were not part of the settlement.

The arbitration panel, however, found that Maine and eight other states have been in compliance and will be eligible for full payments. That means retaining $44 million that already has been paid to the state and an additional $5 million that companies withheld.

Six other states failed to comply with the provision.

Mills praised Assistant Attorneys General Vivian Mikhail and Chris Taub, who presented the state’s case.

“They were up against some of the nation’s highest paid trial lawyers who put up an exhausting battle on behalf of big tobacco. But we won,” Mills said.

Maine’s tobacco settlement funds go to the Fund for a Healthy Maine, which is used for health care and disease prevention purposes. Since 2000, the state has collected nearly $700 million in settlement funds.