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UPDATE 3-LME prevails in legal showdown with Rusal on metal warehouse reform

* Three judge panel overturns original verdict in favour of Rusal

* Rusal says plans to approach Britain’s Supreme Court directly

* LME to implement warehouse reform on Feb. 1 (Adds LME to implement reforms)

LONDON/MOSCOW, Oct 8 (Reuters) - The London Metal Exchange (LME) won its appeal against a court ruling that had halted sweeping reform - aimed at easing huge backlogs to withdraw metal from its global warehousing network - which it said it will implement from Feb 1.

The ruling may have scant impact on the market, however, because warehouse firms have already made changes to the way they operate, anticipating LME’s legal win, analysts said.

A three-judge panel at Britain’s Court of Appeal overturned an original March ruling in favour of Russian aluminium giant Rusal.

That had derailed a key reform of the LME’s network of 732 depots in 37 locations because it regarded the consultation process as “unfair and unlawful”.

“I conclude that the judge was wrong to say the consultation in this case was unlawful,” Lady Justice Arden said in the ruling.

Industrial buyers of aluminium, used in transport and to make beverage cans, have to wait up to two years to get delivery of metal from some LME warehouses. The new rules from the LME, the world’s oldest and biggest market for industrial metals, aim to cut the queues down to a maximum of 50 days.

“The LME has a duty to ensure the integrity of its reference prices and the operation of a fair and liquid market for all industry participants,” Garry Jones, LME chief executive, said in a statement praising the verdict.

Market watchers said warehouses had already been acting as though the new LME rules were in place.

“They have been delivering-out a lot more material. So it (the court ruling) probably doesn’t have much of a short-term impact on the market,” Jefferies Bache analyst Gayle Berry said.

Aluminium inventories at Dutch warehouses in Vlissingen MAL-NLVLI-TOT, which accounts for 40 percent of LME aluminium stocks, have declined 14 percent this year.

RUSAL’S NEXT STEP

The Court of Appeal denied Rusal, the world’s largest producer of aluminium, leave to appeal, but the company said it planned to approach Britain’s Supreme Court directly to gain permission to overturn the ruling.

Wednesday’s ruling follows two days of hearings in July which revolved around the consultation process, not the actual warehouse reforms sought by the LME, owned by Hong Kong Exchanges and Clearing Ltd.

The LME’s new rules, originally due to take force in April, aimed to make owners of warehouses deliver out at least as much metal as they take in, but which Rusal feared would unleash supplies onto the market and depress aluminium prices.

Benchmark LME aluminium prices have shed about 30 percent since touching a peak around $2,800 a tonne in May 2011.

The 137-year-old 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 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.

One issue discussed in the appeal was whether the LME should have considered capping or banning warehouse rents on metal stuck in queues. The LME said this would now be reviewed.

The exchange also said it planned to release a wide-ranging warehousing logistical and legal review it had commissioned.

In August, a U.S. judge dismissed the LME as a defendant from a U.S. antitrust lawsuit that accused banks and commodity companies of conspiring to drive up aluminium prices by restricting supply through the warehouse network. (Additonal reporting by Harpreet Bhal and Veronica Brown in London; Editing by William Hardy)

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