United Company Rusal Plc, R (on the application of) v The London Metal Exchange
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LADY JUSTICE ARDEN
- LORD JUSTICE McCOMBE
- LADY JUSTICE GLOSTER
Areas of Law
- Administrative Law
- Commercial Law
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
Rusal challenged the LME's consultation process on new rules for warehouse queuing issues, arguing the exclusion of the rent ban option explanation was unfair. The initial ruling found the consultation process unfair, but upon appeal, the court held that the LME was not required to include or consult on the rejected rent ban option. The court further ruled that starting a new review during the consultation was not unfair, and the LME's financial interest in warehouses did not bias its decision.
Judgment
Mr Justice Phillips:
On 1 July 2013 the Defendant (“the LME”) issued a consultation notice inviting comments from participants in the international metals market on a change the LME proposed to make to the rules for LME approved warehouses. The proposal was that, where a warehouse had a wait-time (or “queue”) for delivery of metal in excess of 100 days, the amount of metal which the warehouse could load-in would be linked to (and limited by) the amount which it loaded out. The formula governing the linkage was designed to reduce the queue at the affected warehouse by one day for every two business days the new rule applied (“the Proposal”).
The consultation period ended on 30 September 2013. On 7 November 2013 the LME announced its decision to implement a new rule for its warehouses with effect from 1 April 2014 in the terms proposed in the consultation notice, save that the threshold for the application of the linkage formula would be 50 days rather than the proposed 100 days (“the Rule”).
In these proceedings the Claimant (“Rusal”), a leading global producer of aluminium and alumina, seeks to challenge the LME’s consultation process and its subsequent decision. It is not in dispute that the LME is subject to the principles of public law and amenable to judicial review.
Rusal contends (and the LME does not dispute) that the implementation of the Rule will result in an immediate, if short-term, fall in the global open market (or “all-in”) price of aluminium, potentially causing hardship to metal producers such as Rusal, with the potential for longer term damage through the closure of smelters. In that context, Rusal’s grounds of challenge are:
(1) that the consultation process was procedurally unfair, principally because the LME consultation notice did not identify (let alone explain the reason for discounting) the main alternative option for reducing warehouse queues, namely, banning warehouses from charging rent for the period metal is held in a queue (or otherwise capping the amount of rent so charged), an alternative which Rusal asserts would cause significantly less damage to metal producers.
(2) that the LME’s decision to implement the Rule was made without adequate consideration of or inquiry into relevant matters, including the effect the Rule would have on the all-in price of metal and the consequent effect on metal producers, the LME having made a deliberate decision not to consider that factor.
(3) that the decision was a breach