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Rusal, the world’s largest aluminum producer, has filed a lawsuit against the London Metal Exchange in a U.K. court, challenging its plans to reform how it stockpiles commodities, the LME’s owner said on Tuesday.
The Hong Kong Stock Exchange (HKEx), which owns the London burse since last year, said Rusal filed the claim Monday, opposing the LME plan to expedite deliveries of base metals, in particular aluminum, that are traded on the stock.
The scheme, announced in November, aimed to benefiting consumers and boosting the LME’s market credibility. Although metal buyers cheered the rule changes, several producers have opposed the decision.
“LME management considers that the grounds of Rusal’s complaint are without merit, and will defend any judicial review proceedings vigorously,” says the statement.
It adds that “the judicial review seeks to challenge the LME?s decision to introduce changes in its warehousing policy” that followed a three-month consultation.
“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.”
Despite the judicial review, “implementation of the proposed changes to the warehousing policy will proceed as announced” —from April 2014— it added.
As a result of Rusal’s move, HKEx has transferred its regulatory powers and responsibilities over Rusal to the Securities and Futures Commission, another Hong Kong regulator.
That transfer of power, meant to deal with any potential conflict of interest, will remain in place while the judicial review is under way.
Image: Wikimedia Commons
