Court of Appeal upholds London Metal Exchange appeal against High Court ruling

UC RUSAL, a leading global aluminium producer, notes that the Court of Appeal has upheld the London Metal Exchange’s appeal against the High Court judgment of Mr Justice Phillips. Today’s ruling by the Court of Appeal overturns the judgment of Mr Justice Phillips who ruled that the LME’s original consultation and subsequent proposed rule change were unlawful. He held that fairness required the LME to consult on alternative options and, in particular, the option of banning or capping warehouse rents.

RUSAL continues to believe that the LME’s consultation process was procedurally unfair, resulting in a decision which was neither fair, nor proportionate. Accordingly, it will be seeking permission to appeal the Court of Appeal’s judgment to the Supreme Court.

The Company is disappointed by today’s result. However, it notes that, as a result of changed conditions in the aluminium market, the LME’s rule change, if now adopted, is likely to have little effect on queues or premiums. This is because, as a consequence of recent production cuts, the market is no longer in surplus but rather is in deficit. Accordingly, market conditions today are fundamentally different than the conditions in existence at the time the rule change was first proposed.

Commenting on the ruling, Oleg Deripaska, CEO of RUSAL said:

“The reducing trend in aluminium stocks and the recent rise in the aluminium price is to be welcomed and demonstrates improving sector fundamentals, factors that RUSAL alluded to in its initial submission to the consultation in 2013. RUSAL had urged the LME during the initial consultation period to delay its proposed rule change and to release more data to the market so as to allow participants to make a proper assessment of its adequacy and impact. The LME declined to do so, either at that time or in the intervening period between the decision of Mr. Justice Phillips and today’s Court of Appeal judgment. Accordingly, that judgment will do little to address the problems caused by disparities between the LME price and premiums or the general lack of transparency.

RUSAL will continue to seek increased transparency in this important market.”