London 24/12/2013 - The London Metal Exchange (LME) has been hit by a lawsuit from aluminium producer UC Rusal, following the exchange's changes to its warehouse policy, said parent company Hong Kong Exchanges & Clearing Limited (HKEx).
The LME has been named as a defendant in a judicial review claim commenced by Rusal and filed in the English High Court on December 23, said HKEx on Tuesday.
The judicial review seeks to challenge the LME’s decision to introduce changes in its warehousing policy as announced in its notice dated November 7.
Under the rule change, all metal loaded into a warehouse over a three-month period is measured. If there is a queue of more than 50 calendar days, the affected warehouse would be expected to deliver out additional metal based on a formula.
The decision on changes in the warehousing policy was made following a three-month market consultation commenced by LME in July 2013..
“Rusal has alleged that the consultation conducted by LME was unfair and procedurally flawed, that the LME’s changes to its warehousing policy are irrational and disproportionate, and that Rusal’s human rights have thereby been breached,”
The LME management is of the view that the judicial review is without merit and LME will contest it vigorously.
Implementation of the proposed changes to the warehousing policy, will proceed as announced.
UC Rusal had previously called on the LME to postpone its proposed changes to its warehouse regulations, warning of greater confusion and opacity if it does not consider alternative measures.