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The Divisional Court recently handed down judgment in one of The Lawyer’s Top 20 cases for 2023, finding that the London Metal Exchange had not acted unlawfully in taking the unprecedented decision to cancel US$12 billion of trades in nickel futures.

The Claimants had issued judicial review proceedings, challenging the decision of the London Metal Exchange to cancel US$12 billion of trades in ‘3M’ nickel futures on the morning of 8 March 2022 following sharp price rises. The Claimants argued that this decision was unlawful on a number of grounds including that it amounted to a disproportionate interference with their possessions contrary to Article 1, Protocol 1 of the European Convention of Human Rights (and in respect of which they sought US$471 million in damages).

The Divisional Court rejected the claims in a judgment which considered (inter alia): (1) how to construe the LME Rules in their regulatory context, (2) assessments by recognised investment exchanges of whether or not markets have become “disorderly”, (3) margining decisions by regulated clearing houses, and (4) how one ought to analyse an Article 1, Protocol 1 challenge in the context of trades entered into through an exchange and central counterparty operating pursuant to the retained version of the European Market Infrastructure Regulation (“UK EMIR”).

Monica Carss-Frisk KC, Iain Steele and Eesvan Krishnan acted for the Elliott Claimants, instructed by Akin Gump LLP

James Segan KC, George Molyneaux and Hollie Higgins acted for the Jane Street Claimants, instructed by Quinn Emanuel Urquhart & Sullivan UK LLP

The Judgment is available here.

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