United Company Rusal Plc, R (on the application of) v The London Metal Exchange

A lawful consultation must begin while proposals remain formative, give sufficient reasons for an intelligent response, allow adequate time and conscientiously consider the responses. Fairness is intensely fact-sensitive.

A consulting body generally has wide discretion to select the options on which it consults. It need not present discarded alternatives or explain why it rejected them unless specific circumstances make that information necessary for an intelligent response. Adequacy is assessed in context, including information already well known to consultees. A consultation will be unfair where material information is omitted or materially misstated, but the authority need not disclose every submission or item of advice.

The London Metal Exchange proposed a rule linking the amount of metal which certain warehouses could receive to the amount they delivered. The rule was intended to reduce lengthy queues for the release of stored metal.

United Company Rusal plc successfully sought judicial review. Phillips J held in [2014] EWHC 890 (Admin) that the consultation was unfair because it did not explain a discarded alternative involving restrictions on warehouse rent and because that alternative had been inadequately investigated.

The Exchange appealed. The principal issues were whether fairness required disclosure or consultation about the discarded alternative, whether investigations begun during consultation made the process unfair, and whether the Exchange's financial interest in warehouse rent gave rise to disqualifying bias.

1. Appeal allowed unanimously. The consultation was lawful. The judge had extended the common law duty of fairness beyond its proper limits.

2. A consultation must satisfy the principles stated in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213. It must occur while proposals remain formative, provide sufficient reasons to permit intelligent consideration and response, allow adequate time, and conscientiously take the responses into account. The court should intervene only where the facts provide a clear reason for finding unfairness. The inquiry is intensely case-sensitive.

3. A consulting body has wide discretion to select the options on which it consults. It generally need not consult upon discarded alternatives or explain why they were rejected. Exceptional circumstances may require reference to an alternative where that information is necessary to understand the proposal or where exclusion would deprive consultees of their only effective opportunity to advance their case. Those circumstances were absent here. Consultees could understand and oppose the proposed rule without information about the rent-ban option, and several consultees in fact proposed that option.

4. The adequacy of information must be assessed in its full context. A court may consider information already well known to the relevant consultees, even if the consultation document neither states nor incorporates it. The consultation was not unfair because competition-law concerns about rent restrictions were already known within the specialist market. There was no evidence that any consultee had been misled.

5. The Exchange could investigate using rent restrictions as an additional measure while consultation continued. That investigation neither contradicted the consultation notice nor concerned a substitute for the proposed rule. Had the Exchange instead decided that the discarded option was a viable alternative, a fresh consultation notice would have been required. Fairness did not oblige the Exchange to disclose every submission, item of advice or legally privileged opinion.

6. The Exchange could not allow its discharge of its regulatory responsibility for an orderly market to be driven by the competing financial interests of particular market participants. Those interests could nevertheless be relevant where they affected the orderly operation of the market.

7. The Exchange's stock levy was widely known, including to Rusal. By failing to object at the outset, Rusal waived any right to contend that this financial interest vitiated the decision for bias. The appeal was therefore allowed.

1. Court of Appeal (Civil Division): In [2014] EWCA Civ 1271 , unanimously allowed the Exchange's appeal and held that the consultation was lawful.
2. High Court, Administrative Court: Phillips J held in [2014] EWHC 890 (Admin) that the consultation was procedurally unfair, principally because it omitted information about the rent-ban option and that option had been inadequately investigated.