Co. Rusal (UC Rusal) has filed a lawsuit claiming the London
Metal Exchanges decision to implement a new warehousing
policy breaches its rights under the European Convention on
Human Rights, a source close to the company said.
UC Rusal claims the
decision breaches its right to "the peaceful enjoyment of its
possessions," as economic interests and goodwill related to a
business are deemed to fall under the definition of
possessions, the source said.
A judicial review, in
which the LME has been named as a defendant, will be heard in
the High Court of England and Wales in February or March, ahead
of the implementation of the proposed rule change April 1, the
UC Rusal isnt
seeking financial compensation in the case, AMM sister
publication Metal Bulletin has been told.
Specifically, UC Rusal
is challenging the LMEs Nov. 7 decision to shorten the
limit on the length of queues permitted at individual warehouse
locations to 50 days from a 100-day limit proposed in July (
amm.com, Nov. 7).
Moscow-based UC Rusal
is also claiming the LMEs consultation process, carried
out before making the decision to change warehousing policy,
was "procedurally flawed," according to the source.
The company believes
the LMEs decision will hinder its economic interests, as
it will have a direct effect on the price at which it can sell
In the judicial
review, UC Rusal will try to prove the LMEs decision had
effectively already been made before the consultation process
began, the source said.
The company is also
seeking to prove that the exchange didnt release the
underlying data and reports upon which its decision was based,
and that it didnt conduct any risk- or cost-benefit
analysis concerning the likely effects of the change.
UC Rusal claims that
the exchange gave preference to the views of the LME Warehouse
Committee and took account of its own financial interests in
rejecting an alternative to the rule change, the source
The company said the
LME gave no indication during the consultation process that it
was planning to reduce the queue limit further, from the
original 100 days, meaning it received no comments on the
possible effects of such a change, the source said.
Therefore, UC Rusal
believes the LME didnt carry out a sufficient inquiry,
consider relevant concerns or adopt a "rational and
proportionate" decision, according to the source.
The company has agreed
that the likely outcome of the rule changes will be that
premiums will fall while the LME price will rise, but also
believes there will be a time lag of up to three years between
the fall in premiums and the rise in aluminum prices.
UC Rusal is calling
for the LME decision to be quashed, which would force the
exchange to carry out a new consultation process.
A version of this
article was first published in AMM sister publication Metal