Key Facts
- •On March 8, 2022, the price of 3M nickel on the London Metal Exchange (LME) spiked dramatically.
- •The LME suspended nickel trading and subsequently cancelled all trades made after midnight on March 8, 2022.
- •Elliott Associates L.P. and Elliott International L.P. (Elliott) claimed this cancellation caused them a loss of US$456 million in profits.
- •Elliott challenged the LME's actions on grounds of domestic public law and breach of their Convention rights under the Human Rights Act 1998 (specifically Article 1 of the First Protocol – A1P1).
Legal Principles
Judicial review of decisions made by public authorities is subject to the usual principles of public law.
Domestic public law
The power to cancel trades must be exercised in accordance with public law principles.
LME Rules, TR 22; MiFID II; Recognition Requirements Regulations
A1P1 of the Human Rights Act 1998 protects the peaceful enjoyment of possessions. Deprivation is only lawful in the public interest and subject to conditions provided by law.
Human Rights Act 1998, Article 1 of the First Protocol
The Tameside duty requires a decision-maker to take reasonable steps to acquaint themselves with relevant information.
Secretary of State for Education & Science v Tameside Metropolitan Borough Council [1977] AC 1014
Procedural fairness requires giving an opportunity to make representations before a decision affecting legally protected interests, unless impossible, impractical or pointless.
Osborn v Parole Board [2013] UKSC 61; Bank Mellat v HM Treasury (No. 2) [2013] UKSC 14
A power must only be exercised for the purpose for which it was conferred.
Padfield v Minister of Agriculture, Fisheries & Food [1968] AC 997
Contractual rights can constitute possessions under A1P1 if sufficiently established and enforceable.
M (Kenya) v Secretary of State for the Home Department [2008] EWCA Civ 1015; Breyer Group Plc v Department of Energy & Climate Change [2014] EWHC 2257
Outcomes
Appeal dismissed.
The LME acted lawfully in cancelling the trades to prevent market collapse; any interference with Elliott's rights was justified.
LME's decision to cancel trades was lawful under domestic public law.
The extreme price volatility constituted exceptional circumstances justifying the cancellation under TR 22, given the risk of systemic failure.
Elliott's A1P1 claim failed.
Even if Elliott's rights constituted possessions, there was no unlawful interference; the cancellation was justified in the public interest.