Activist hedge fund firm Elliott Associates has lost its appeal against the dismissal of its lawsuit against the London Metal Exchange (LME) over the cancellation of billions of dollars worth of nickel trades, according to a report by Reuters.
The case centred on the LME’s decision to cancel $12bn in nickel transactions in March 2022 after prices surged to record highs of over $100,000 per metric ton within hours, disrupting the market.
Elliott initially filed its lawsuit at London’s High Court, but the case was dismissed in November 2023. On Monday, the Court of Appeal upheld that decision, stating that the LME acted within its rights to cancel the trades to maintain market stability.
Judge Stephen Males described the extreme price surge on 8 March, 2022, as “a once in a generation event,” asserting that the LME’s actions were lawful and necessary to safeguard the broader market.
“There was no intention to favour one group of traders over another,” Males wrote in a unanimous ruling by a three-judge panel. “The decision was made in the interest of the market as a whole. Allowing the 8 March trades to stand would have posed a serious risk of a ‘death spiral’ in the international metals market.”
During a hearing in July 2023, Elliott had argued that the LME’s failure to disclose key documents warranted overturning the High Court ruling. Elliott’s legal team pointed to the late disclosure of internal LME documents, such as the “Kill Switch” and “Trade Halt” procedures, and an internal report that allegedly highlighted potential conflicts of interest.
A spokesperson for Elliott expressed disappointment with the ruling: “Elliott is further analysing the decision with its legal team and considering its next steps.”
Elliott and fellow plaintiff, Jane Street Global Trading, had sought a combined $472m in damages, alleging that the LME’s actions were unlawful.
