So, the judgment has been given and the London Metal Exchange’s consultation on changes to its warehousing policy was “so unfair as to be unlawful” and its decision to implement the linked load-in load-out rate for warehouses has been quashed by the UK High Court. Here is a breakdown of the key events leading up to the ruling.
1 July 2013: The LME announces a three-month consultation on new proposals to get metal flowing out of warehouses more quickly.
Throughout the summer and into the autumn, the exchange comes under fire from various banks, producers and warehousing companies regarding the rules, not to mention a number of lawsuits relating to the way aluminium is moved in the warehousing system.
25 October 2013: The LME makes a decision on the new rules, but waits another week for the UK regulator to announce what the changes are going to be.
7 November 2013: The exchange shortens the limit on the length of queues it will permit at individual warehouse locations to 50 days, down from the 100-day limit it proposed in July.
The announcement is followed by weeks of discussion over whether the rules would push premiums up or down, move metal to off-warrant locations, and increase stocks in on-warrant sheds, and arguments both for and against the new load-in load-out plans.
24 December 2013: Eventually, United Co Rusal takes the LME to court, claiming the rules breached 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, and requests a judicial review.
The LME responds by defending the claims and announcing that it will still go ahead with the proposed rule changes.
27 February 2014: Rusal has its day in court and claims that the policies on warehouse load-in and load-out rates originated with Charles Li, ceo of owner HKEx, and may have been connected with a desire to be seen not to be “doing nothing”.
28 February 2014: The LME rejects Rusal’s claim as “wholly absurd”. Mr Justice Phillips, presiding, says he will make a decision soon.
27 March 2014: The court sides with Rusal on the subject of the consultation being unfair, and the London Metal Exchange’s proposed linked load-in load-out warehousing policy will not go ahead on April 1 as planned.