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UPDATE 1-London Metal Exchange seeks to appeal warehouse ruling
April 28, 2014 / 11:46 AM / 3 years ago

UPDATE 1-London Metal Exchange seeks to appeal warehouse ruling

(Adds details, background)

LONDON, April 28 (Reuters) - The London Metal Exchange (LME) said it planned to seek permission to appeal against a court ruling it lost last month, which halted a major reform aimed at cutting backlogs at warehouses.

“We will be seeking leave to appeal,” LME spokeswoman Kathy Alys said on Monday.

The exchange, the world’s largest market for industrial metals such as copper and aluminium, previously said it was taking legal advice on whether to appeal the ruling or to launch a new consultation on its warehouse policy.

In late March, Russian aluminium producer Rusal won a ruling that halted a warehouse reform because consultations had been “unfair and unlawful”.

The LME, which is owned by Hong Kong Exchanges and Clearing Ltd, earlier this month lost the first stage of an effort to appeal, in which it turned to the court that made the original ruling.

Now it is going up to the next level by filing with the Court of Appeal.

A legal source said parties that lose rulings are often advised to seek leave to appeal to give them the widest possible set of options.

The LME oversees warehouses where companies that buy metals such as aluminium or copper on its futures market can take delivery of quality-assured supplies if needed.

Big banks and traders that own the warehouses and charge rent have profited from letting long queues build up for buyers to withdraw metal. Some also keep huge stocks of aluminium tied up, unavailable to manufacturers, in long-term financing deals.

The backlog has kept the cost high for obtaining physical aluminium, even though the world is awash with supply. In a bid to appease industrial consumers, the LME moved last year to implement reforms that would cut the queues. (Reporting by Eric Onstad; editing by Keiron Henderson and Jane Baird)

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