United Company Rusal Plc, R (On the Application Of) v The London Metal Exchange

A lawful consultation must be fair, undertaken while proposals remain capable of alteration, and provide sufficient information for intelligent consideration and response. A decision-maker may ordinarily consult on a preferred option without setting out every discarded alternative. However, fairness may require consideration of a particular alternative where it is central to the background, offers a materially different solution, and affected persons would otherwise lose their only meaningful opportunity to address it. A consultation may be unlawful where the decision-maker simultaneously investigates such an alternative but fails to disclose that fact. Re-consultation is required only where the subsequently adopted proposal is fundamentally different from the proposal consulted upon.

Rusal sought judicial review of the London Metal Exchange’s consultation and decision to introduce a warehouse rule linking the amount of metal loaded into a warehouse to the amount loaded out when queues exceeded a specified threshold. Rusal alleged procedural unfairness, failure to consider relevant matters, and breaches of human rights.

On 7 January 2014 Carr J directed a rolled-up hearing of permission and the substantive application. The central issues were whether the consultation should have addressed banning or capping rent on metal held in queues, whether the LME had made sufficient inquiry into relevant matters, and whether the change from a 100-day to a 50-day threshold required further consultation.

1. Outcome. Permission to bring judicial review proceedings was granted on all three grounds. The substantive application succeeded on procedural unfairness and failure to make sufficient inquiry. The LME’s decision to implement the Rule was quashed.
2. Consultation. The requirements summarised in [2001] QB 213 apply subject to the overarching requirement of fairness. A decision-maker may ordinarily consult on a preferred option and need not consult on every discarded alternative. However, fairness may require an alternative to be addressed where it is central to the decision-making context and excluding it deprives consultees of a real opportunity to make an informed contribution.
3. The option of banning or capping rent was identified in the Europe Economics material as capable in principle of addressing the queue problem. The LME later accepted that it was the most practical suggested alternative and began a fresh legal review during the consultation. Continuing the consultation without explaining that option, the reasons previously given for discounting it, and the ongoing review was unfair. Consultees were thereby deprived of information necessary for intelligent consideration and response.
4. The failure to disclose the full Europe Economics report and the internal review did not independently render the consultation unlawful, although it formed part of the wider unfairness. A detailed cost-benefit analysis of the market impact was not required, given the complexity and number of variables involved.
5. The LME was not required to disregard its inherent structural conflict. The doctrine of necessity applied. In any event, Rusal’s failure to raise the known stock-levy issue before the decision amounted to waiver.
6. The reduction of the threshold from 100 to 50 days did not create a fundamental difference requiring re-consultation. It altered one factor in an otherwise unchanged scheme and remained a matter of degree.
7. The LME also failed to make sufficient inquiry before commencing consultation. Its acceptance that a fresh competition-law review was required supported the conclusion that relevant inquiry into the rent alternative should have occurred earlier. By contrast, the LME was entitled to disregard the competing interests of producers and buyers in price effects, unless the effects threatened damage to the market itself.
8. The human-rights issues were not determined. Rusal accepted that its claims under the Human Rights Act depended on success on the first two grounds. The question whether loss of future business revenue constituted a protected possession under article 1 of Protocol 1 was left open.

This was a first-instance judicial review. On 7 January 2014 Carr J directed that the permission application and substantive hearing proceed together as a rolled-up hearing. Mr Justice Phillips granted permission and allowed the substantive application on grounds 1 and 2.