IN THE HGH COURT OF JUSTICE				CASE NO: CO/2470/98             
QUEENS BENCH DIVISION
CROWN OFFICE LIST
THE COUNTY COURT, AT SWANSEA
Thursday 30 March 2000
Before:
The ho mr justice richards
The queen
V
          The london metal exchange limited    Respondents
Albatros warehousing bv                        Claimant
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
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Official Shorthand Writers to the Court)
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Counsel: Claimant: Miss P Baxendale QC and Mr J strachan instructed by Pitmans (sols)
RESPONDENT : The Hon Mr M Beloff QC and Miss D Rose instructed by Linklaters (Sols)
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Judgment
As Approved by the Court
Crown Copyright ©
MR JUSTICE RICHARDS:
1.	Albatros Warehousing BV ("Albatros") operates a warehousing business and is listed as such with the London Metal Exchange Limited ("the LME").  On 9 June 1998 the Appeal Committee of the LME imposed sanctions, including a fine of £200,000, on Albatros for two breaches of certain of the LME's rules.  By these proceedings Albatros seeks to quash that decision.  The main grounds advanced are that (1) the decision of the Appeal Committee was vitiated by bias, (2) the Appeal Committee erred by adducing new evidence of fact during the hearing, (3) in imposing the sanctions the Appeal Committee failed to have regard to material considerations, and (4) the sanctions imposed were grossly disproportionate and thereby Wednesbury unreasonable.  The application raises a threshold question whether the decision of the Appeal Committee is amenable to judicial review.
Legal framework
2.	The LME, a company limited by guarantee, is a "recognised investment exchange" within the meaning of the Financial Services Act 1986.  As a recognised investment exchange, it is "an exempted person as respects anything done in its capacity as such which constitutes investment business" (s.36(1)) and is thereby entitled to carry on investment business which would otherwise be prohibited by s.3.   "Investment business" is defined by s.1(1) and Schedule 1 to the Act.  It is common ground that Albatros's warehousing business does not itself count as investment business.  
3.	A body's status as a recognised investment exchange depends upon the making of a recognition order by the Secretary of State, who may make an order if it appears to him that the requirements of Schedule 4 are satisfied (s.37(4)) and who may revoke an order if it appears that any such requirement is not satisfied or that the exchange has failed to comply with any of the obligations to which it is subject under the Act (s.37(7)).  The material provisions of Schedule 4 are these:
"Safeguards for investors
2.(1)	The rules and practices of the exchange must ensure that business conducted by means of its facilities is conducted in an orderly manner and so as to afford proper protection to investors.
(2)	The exchange must -
(a)	limit dealings on the exchange to investments in which there is a proper market; and
(b)	where relevant, require issuers of investments dealt in on the exchange to comply with such obligations as will, so far as possible, afford to persons dealing in the investments proper information for determining their current value.
….
Investigation of complaints
4.	The exchange must have effective arrangements for the investigation of complaints in respect of business transacted by means of its facilities.
Promotion and maintenance of standards
5.	The exchange must be able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of investment business ….
Supplementary
6.(1)	The provisions of this Schedule relate to an exchange only so far as it provides facilities for the carrying on of investment business; and nothing in this Schedule shall be construed as requiring an exchange to limit dealings on the exchange to dealings in investments.
…."
4.	The LME has published Rules and Regulations which govern the conduct of LME members (who are contractually bound by them) and are aimed inter alia at meeting the requirements of Schedule 4.  Warehouse operating companies are not members of the LME and are not governed by those Rules and Regulations, but are subject to similar contractual arrangements with the LME.  Whether those arrangements also serve to meet the requirements of Schedule 4 is one of the issues to be considered in relation to the amenability of the decision to judicial review.  The importance of the arrangements derives from the fact that trading on the LME is based on warrants, which are documents of title to a particular lot of metal, meeting particular specifications as to quality and description and stored in a particular warehouse.  Only approved (listed) warehouses are entitled to issue such warrants; and for that purpose they must comply with detailed requirements, including the carrying out of checks to ensure that the metal is of the requisite quality. 
5.	The current contract between the LME and Albatros, dated 16 January 1996, provides for the listing of Albatros, which "agrees to be bound by the conditions, procedures and notes as laid down for Warehouse Companies as amended by the LME from time to time …".  Schedule C contains relevant conditions and procedural notes.  Conditions as to the issue of LME warrants are contained in Clause D of Schedule C.  They provide inter alia that Warehouse Companies must pay particular attention to the LME Special Contract Rules for Metals prevailing from time to time and must refuse to issue warrants if for any reason the metal or supporting documentation does not conform to the relevant Special Contract Rules.
6.	Provisions governing disciplinary action are contained in Clauses I to N of Schedule C.  They include:

"I. Enforcement of Conditions
a)	Allegations of misconduct or bringing into disrepute the LME or violations of the conditions laid down for Warehouse Companies shall be investigated by a Warehouse Disciplinary Committee consisting of Board Directors of the LME or other persons nominated by or under the authority of the Chief Executive of the LME. 
….
J. Sanctions
The sanctions which may be imposed by a Warehouse Disciplinary Committee shall include one or more of the following: -
a)	the issue of a warning or reprimand;
b)	the imposition of a fine;
c)	the withdrawal either temporarily or permanently of listed Warehouse Company status;
d)	such other penalty as the Warehouse Disciplinary Committee shall think fit.
….

M. Appeal

a)	Any person and/or Warehouse Company who is found by a Warehouse Disciplinary Committee / LME Warehousing Committee to have committed an act of misconduct or violated the conditions and is dissatisfied with the Warehouse Disciplinary Committee's / LME Warehousing Committee's findings or decisions may, within seven days of receiving notice thereof, appeal in writing to the Board of Directors against the same and may make such written representations and supply such written information as he may consider relevant.  Implementation of any decision appealed against shall be suspended pending the determination of the appeal.

b)	A Director of the LME or other persons may not participate in consideration of the appeal if they have participated in the finding or the decision of the Warehouse Disciplinary Committee / LME Warehousing Committee against which the appeal is made, or if they have any financial interest in the matter either personally or through any company with which they may be connected.

c)	The Board of Directors shall as soon as reasonably practicable after receiving notice of the appeal confirm or amend the Warehouse Disciplinary Committee's / LME Warehousing Committee's finding or decision and shall notify the appellant in writing accordingly.  The Board of Directors may make such arrangements as they think fit to consider any such appeal.

d)	The appellant may appear before the Board of Directors and make such representations in support of his appeal as he may think fit, provided that no new evidence of fact may be adduced unless the Board of Directors are satisfied that there is good reason why such evidence was not adduced in the proceedings before the Warehouse Disciplinary Committee / LME Warehousing Committee.

e)	Notice of any appeal to the Board of Directors and of their decision shall be posted to the Exchange.  
The decision of the Board of Directors on such an appeal shall be final."

Factual background
7.	Albatros became an LME listed warehouse in 1992.  It has been in breach of the LME conditions on three previous occasions.  In 1993 it was admonished for issuing warrants for metals stored in a warehouse and compound which had not been approved by the LME.  In 1996 it was reprimanded for failing to maintain accurate records, failing properly to issue warrants and submitting incorrect stock returns on a number of occasions.  The breaches were considered sufficiently serious to justify the imposition of a financial fine, but there had been a 6 week suspension of the right to issue warrants and the committee took the view that the consequent loss of business was a sufficient financial sanction.  The third occasion was in 1997, when it was severely reprimanded for late payment of its stock levy.  An order to pay the costs of the investigation in the sum of £4,000 was suspended on condition that there were no material breaches of the contract for 12 months from 3 November 1997.
8.	The breaches that give rise to the present proceedings took place in May and August 1997, when Albatros issued warrants in respect of two shipments of tin which did not meet LME's standards.  It subsequently transpired that in breach of LME requirements the tin was contaminated with impurities, including unacceptable levels of arsenic, contained brands which were not on the approved list, was not accompanied by a certificate of analysis within the quality specification, comprised tin from more than one country and was made up of mixed brands. The breaches came to light when a customer rejected the warranted tin on its delivery from Albatros's warehouse.  
9.	Albatros has accepted that it was thereby in breach.  It says that it should have carried out its own independent checks before placing the tin on warrant and that it mistakenly relied on the representations of the shipper to the effect that the tin was of the requisite quality.  It describes this as an error of judgment, not a deliberate flouting of the rules.  As soon as Albatros became aware of the problem, it notified the LME.   In consequence the LME cancelled warrants amounting to approximately 15% of total LME stocks of tin, resulting in a short-term shortage in supply.  This caused a significant disturbance in the market and exacerbated a backwardation in the price of tin (i.e. where the price for immediate delivery exceeds the future price).  Thereafter Albatros took steps to compensate traders who had suffered loss as a result of the breaches and to keep the LME informed of the position. 
10.	In January 1998 a Warehouse Disciplinary Committee was appointed to investigate the matter. The statement of charges included eight charges (with sub-charges) relating to specific breaches of the rules and one charge that by its actions Albatros had brought the LME into disrepute.  The LME Executive sent the committee a written submission on the statement of charges.  The hearing before the committee, which was attended by Albatros without legal representation, took place on 23 March 1998.  Albatros pleaded guilty to six charges or sub-charges relating to specific breaches, namely 1.1 (breach of clause 1 of the Special Contract Rules for Tin, in that the warranted tin did not conform to the contract specification), 1.2 (breach of the same clause, in that the warranted tin was not of approved brands), 2.1 (breach of the Special Rules Governing the Placing of Tin on Warrant, in that tin put on warrant was not accompanied by a certificate of analysis within the quality specification), 2.2 (breach of the same rules, in that each warrant was not made up of the production of one country), 2.3 (breach of the same rules, in that each warrant did not consist of one brand) and 5 (breach of the same rules and/or misrepresentation of the tin underlying the warrants, in that the warrants stated that tin was a particular brand which it was not).  
11.	In its decision, also dated 23 March, the committee found Albatros guilty on the charges to which it had pleaded guilty, made no findings on the other charges relating to specific breaches, but held that Albatros had brought the LME into disrepute.  It stated that the offences were very serious breaches of contract in respect of two shipments, that it had closely considered delisting Albatros, but that bearing in mind the pleas of guilty it had decided not to delist but to impose a fine of £250,000.
12.	On 6 April Albatros lodged an appeal against the sanction imposed, but not against the findings of guilt.  The LME Executive submitted a response on 22 April.  The composition of the Appeal Committee was the subject of exchanges between the LME and Albatros, to which it will be necessary to make further reference.  The hearing before the Appeal Committee took place on 1 May.  On 8 June (as recorded in a letter of 9 June) the Appeal Committee decided to impose the following sanctions:  (1) a fine of £200,000, (2) a requirement that Albatros commission a management consultancy audit to ensure that its management and control systems were sufficiently robust to deliver LME standards and requirements in the future, (3) payment of costs in the sum of £1,650, and (4) activation of the suspended order for payment of costs in the sum of £4,000 in respect of the previous disciplinary investigation.  The fourth sanction was subsequently withdrawn, having been imposed in error (since the new breaches took place before the date of the previous suspended costs order).  The second has been complied with and is no longer a live issue.  The matters still in dispute are (1) and (3) - the fine and the order for costs.
13.	On 11 June the LME issued a public notice setting out the Appeal Committee's findings.  In a press statement the Chief Executive commented:
"This announcement clearly demonstrates the Exchange's commitment to ensuring that warehousing companies approved by the LME meet the standards of performance expected by the LME's users and required by the LME itself."
14.	Written reasons for the Appeal Committee's decision were given at a much later date, after the commencement of the judicial review proceedings.  That delay and the document's reference to the subsequent withdrawal of the fourth sanction prompted the expression of doubts by Miss Baxendale QC for Albatros as to whether the document contains the actual contemporaneous reasons for the Appeal Committee's decision. On the basis of the information provided at the hearing by Mr Beloff QC for the LME, I am satisfied that it does.
15.	The written reasons set out the background to the appeal and then summarise the deliberations on which the decision was based.  Under the heading "the offences" the reasons stress the impact of the breaches and why such conduct was considered to have brought the LME into disrepute.  The Appeal Committee considered that it was appropriate to demonstrate to the market that such "gross errors" by a warehouse were regarded extremely seriously and to take action such as to encourage all warehouses to have scrupulous regard to the validity of warrants issued.  The reasons then examine "factors which could mitigate the gravity of the offences".  The Appeal Committee concluded inter alia that Albatros's failure in so many respects, in relation to two separate shipments, made clear that it had not operated adequate systems and/or that its staff were not appropriately trained.  Further, evidence showed that the failure was not a mere oversight.  Account was taken of Albatros's pleas of guilty to some of the charges, but this was not considered to be a strong mitigating factor (they were late pleas and did not extend to the disrepute charge).  Consideration was given to Albatros's contention that the gravity of the offence had been mitigated by the steps taken to reduce the impact on third parties and that they had been commended by the LME's Chief Executive for such action.  Those points give rise to specific issues considered later in this judgment.  The reasons next examine "circumstances which could render a fine of £250,000 unduly harsh", including contentions advanced by Albatros as to its capacity to pay the fine, the fact that it had already committed approximately £170,000 through settlement negotiations and related actions, and the extent to which Albatros had been subject to previous disciplinary action.
16.	The last part of the written reasons records the Appeal Committee's findings.  The committee considered that the financial penalty of £250,000 imposed by the Warehouse Disciplinary Committee was in general circumstances appropriate given the seriousness of the offences.  It judged the penalty to be commensurate with previous penalties imposed by the LME for far less serious offences.  That aspect of its reasoning is another matter to which it will be necessary to return.  In the light of the information provided about Albatros's financial position, however, the Appeal Committee had decided to reduce the fine to £200,000, which was considered to be well within the ability of the company to pay.  The committee was also extremely concerned about the ability of Albatros to deliver LME standards in the future, and it was for that reason that it decided to require Albatros to commission a management audit by an appropriate consultant.  Finally the committee dealt with the question of costs and the activation of the suspended penalty.  It determined that a Notice should be issued announcing its findings and the sanctions imposed.  All the decisions were expressed to be unanimous.
Is the decision amenable to review?
17.	Mr Beloff submits that the application to this Court fails at the first hurdle on the ground that the decision of the Appeal Committee is not amenable to judicial review.  Although the LME might be amenable to judicial review in relation to its regulation of investment business, it is not so amenable in relation to the regulation of warehousing operations.  Mr Beloff points to the following factors as supporting that conclusion:  (1) The LME is a private body, a company limited by guarantee. (2) The mode of regulation of warehousing is by contract, not e.g. by rules made under statutory authority.  (3) Warehousing is not itself an intrinsically necessary or universal feature of investment exchanges.  (4) The provision or regulation of warehousing is not required by the 1986 Act or other statutory provision.  (5) The requirements of Schedule 4 to the 1986 Act are applicable only in so far as the exchange provides facilities for the carrying on of investment business, which does not include warehousing: see paragraph 6(1), which was added by the Companies Act 1989 so as to clarify the limited scope of Schedule 4.  Thus the Secretary of State could not withdraw recognition if the LME did not regulate warehousing.  (6) LME warrants are documents of title primarily and directly relevant to the sale of the commodities, not to investment business.  (7) The LME provides, in addition to investment business, other important functions such as global reference prices and quality standards for metal.  It is in respect of those non-investment functions that the regulation of approved warehouses is important.  
18.	 The only factor telling in the opposite direction, he submits, is that the integrity of the warrants bears indirectly on investment business, to the extent that a proper market in e.g. futures and options depends ultimately on confidence in the warrants.  That, however, is insufficient to bring the regulation of warehousing within the scope of judicial review.
19.	Mr Beloff stresses that the jurisdictional point is taken not as a means of avoiding the grounds of challenge in the present case, all of which are resisted in any event on their merits, but because an analysis in terms of private rather than public law might involve differences in substantive law and remedies capable of affecting the outcome in other cases.  
20.	 Miss Baxendale, on the other hand, lays stress on the fundamental importance of warrants for the purpose of the LME's functions in respect of investment business as well as its other functions.  Warehousing may not be intrinsically necessary for investment exchanges, but it is necessary for the LME.  The reliability of warrants issued by warehouses is crucial.  The regulation of warehouses and of the issue of warrants by them is therefore an integral part of the LME regulatory regime, as is recognised in the LME's own documents and affidavits.  Without such regulation the LME would be unable to comply with the requirements of Schedule 4 to the 1986 Act.  Thus the regulation of warehousing is part of the structure relevant to the regulation of investment business even though warehousing itself is not investment business and warrants are not themselves financial instruments dealt with on the exchange.  Without such regulation by the LME there would be regulation by government.  Nothing turns on the status of the LME as a private body or on the fact that regulation is achieved through contract.  Such features have not precluded judicial review of other regulatory bodies and would not preclude judicial review of the LME in respect of regulatory functions that are accepted to fall within the scope of the 1986 Act.  Accordingly there is no reason why they should preclude judicial review in respect of the regulation of warehousing.  Such regulation is the exercise of a public function in respect of which the LME is amenable to review.   That is reinforced by the fact that the LME is the world's largest market for trading in metals (though Miss Baxendale backed away from a contention that it has monopoly power). 
21.	The passages in the LME's own documents on which Miss Baxendale relies include these from the written reasons for the Appeal Committee's decision:
"World-wide acceptance of the LME's market system depended on all users of the market having full confidence that any warrant gave good title to metal meeting the contract specification.  Any event which undermined that confidence was damaging to the LME and an episode which publicly demonstrated unreliability of warrants on a large scale was seriously damaging.  It was also crucial to confidence in the market that statistics of metal stocks in LME approved warehouses were reliable as market users took trading decisions based on those stock figures" (para 8).
"The Appeal Committee judged the penalty to be commensurate with previous penalties imposed by the LME for far less serious offences ….  Regulatory fines by all regulatory bodies had been increasing in recent years, overseen by the Financial Services Authority, in an effort to raise the level of compliance, investor protection and the integrity of the Recognised Investment Exchanges such as the LME" (para 18).
"The LME had a legal responsibility under Schedule IV to the Financial Services Act 1986 to provide fair and proper markets in addition to its moral responsibility to all users of its markets" (para 20).
22.	Similarly, in an affidavit sworn by Mr Christopher Farrow, Chairman of the Appeal Committee, in support of an application for the removal of a stay that had been imposed at the time of the grant of leave to apply for judicial review, he states:
"The LME has a legal responsibility to ensure fair and proper markets, the reliability of warehousing is an integral part of that and the audit requirement was imposed on Albatros in accordance with this duty" (para 15).
"In these circumstances the Appeal Committee felt that in the light of the LME's responsibilities for the overall integrity of the market it was necessary to take steps to minimise the possibility that further breaches might occur" (para 17)
In a later affidavit Mr Farrow states:
"The integrity of LME warrants is fundamental to the operation of the LME's metal markets" (para 6).
23.	Despite those competing submissions, I do not think that the broad principles are in dispute.  The essential question is whether, in exercising disciplinary powers over listed warehouses, the LME is performing a public function.  The fact that the powers are exercised pursuant to a contractual relationship between the LME and the warehouse is a factor telling against the performance of a public function but is far from decisive of the question.  It is necessary to make a broader assessment based on all the circumstances of the case and in particular on the extent to which the powers can be said to be woven into a system of governmental control.  
24.	It is, I think, sufficient to refer to three authorities.  First, in R v. Panel on Takeovers and Mergers, ex parte Datafin Plc [1987] 1 QB 815, Lloyd LJ expressed the matter in this way:
"… Of course the source of the power will often, perhaps usually, be decisive.  If the source of the power is a statute, or subordinate legislation under a statute, then clearly the body in question will be subject to judicial review.  If, at the other end of the scale, the source of power is contractual, as in the case of a private arbitration, then clearly the arbitrator is not subject to judicial review ….
But in between these extremes there is an area in which it is helpful to look not just at the source of the power but at the nature of the power.  If the body in question is exercising public law functions, or if the exercise of its functions have public law consequences, then that may … be sufficient to bring the body within the reach of judicial review.  It may be said that to refer to 'public law' in this context is to beg the question.  But I do not think it does. The essential distinction, which runs through all the cases to which we [were] referred, is between a domestic or private tribunal on the one hand and a body of persons who are under some public duty on the other …." (847A-D).
25.	In R v. Disciplinary Committee of the Jockey Club, ex parte Aga Khan [1993] 1 WLR 909, Sir Thomas Bingham observed that the effect of the decision in Datafin was "to extend judicial review to a body whose birth and constitution owed nothing to any exercise of governmental power but which had been woven into the fabric of public regulation in the field of take-overs and mergers" (921c).  By contrast, he held (at pages 923-924) that judicial review did not lie against the Jockey Club which, although regulating a significant national activity and exercising powers which affected the public and were exercised in the interests of the public, was not a public body and had not been woven into any system of governmental control of horseracing.  Hoffmann LJ (at pages 931-933) also stressed the need for the relevant power to be "governmental in nature", observing that in Datafin there was "a privatisation of government itself" and that bodies such as the Advertising Standards Authority and IMRO had been held to be amenable to review as "private bodies established by the industry but integrated into a system of statutory regulation".  He accepted that a body such as IMRO which exercised governmental powers was not any the less amenable to public law because it had contractual relations with its members.  But the Jockey Club was not exercising governmental powers.  Control over its exercise of power had to be found in that case in the law of contract, which provided entirely adequate remedies.
26.	The need for care in determining whether the particular functions are public or private is exemplified by R v. Lloyd's of London, ex parte Briggs [1993] 1 Lloyd's Rep 176, in which it was held that judicial review did not lie to challenge a decision by Lloyd's agents to serve notice of a cash call on a number of Names.  Leggatt LJ stated (at page 185):
"The fact is that even if the Corporation of Lloyd's does perform public functions, for example, for the protection of policy holders, the rights relied on in these proceedings relate exclusively to the contract governing the relationship between Names and their members' agents and, in some instances, their managing agents.  We do not consider that that involves public law ….
Lloyd's is not a public body which regulates the insurance market.  As [counsel] remarked, the Department of Trade and Industry does that.  Lloyd's operates within one section of the market. Its powers are derived from a private Act which does not extend to any person in the insurance business other than those who wish to operate in the section of the market governed by Lloyd's and who, in order to do so, commit themselves by entering into the uniform contract prescribed by Lloyd's.  In our judgment, neither the evidence nor the submissions in this case suggest that there is a public law element about the relationship between Lloyd's and the Names as places it within the public domain and so renders it susceptible to judicial review".
27.	In the present case the first step in the analysis, as it seems to me, must be the position of the LME within the system of investor protection established by the Financial Services Act 1986.   The Act provides for such protection in the case of investment exchanges not by laying down a comprehensive set of rules to be policed by a public body, but by laying down general criteria that must be met by an exchange in order to qualify for recognition and thereby for the right to carry on investment business.   It thereby leaves the function of detailed regulation to the exchange.  When engaged in the process of regulation necessary to meet the requirements of the 1986 Act, in particular those of Schedule 4, the LME is in my judgment performing a function that can properly be said to be woven into a system of governmental control of investment business or integrated into a system of statutory regulation.  In respect of the performance of such a function it is amenable to judicial review despite the fact that it has a contractual relationship with those whom it regulates.  It is in a position similar to that of Lautro, which in R v. Lautro, ex parte Ross [1993] QB 17 was conceded by Mr Beloff to be a body whose decisions were susceptible to judicial review.  It is true that Lautro was recognised as a self-regulating organisation under the provisions of the 1986 Act dealing with authorised persons, whereas the LME is recognised as an investment exchange under the provisions dealing with exempted persons, but that difference does not appear to me to be capable of producing a different result as regards amenability to review.  
28.	The next question is whether the regulation of warehouses, at least as regards the issue of warrants, is sufficiently connected with that public function to bring it within the scope of judicial review, or whether it relates only to the LME's other functions and is directed only at the protection of the commercial interests of the LME.  As to that, it is true that the 1986 Act does not regulate directly the physical trade in metal, warehousing or the issue of warrants, none of which counts as investment business.   But the provisions of Schedule 4 are in my view capable of biting indirectly on non-investment business if and to the extent that the regulation of non-investment business is necessary in order to meet the requirements laid down in respect of the conduct of investment business.  On the evidence before the court there is no escaping the fundamental importance of warrants for all aspects of the LME's operations.  I accept Miss Baxendale's submission that the reliability of warrants is crucial to the proper conduct of investment business as well as for the LME's other functions.  That is how the matter is seen by the LME itself, as is apparent from the extracts I have quoted from the written reasons of the Appeal Committee and the evidence filed on behalf of the LME in these proceedings.  Whether the LME would be in breach of the requirements of Schedule 4 if it failed properly to regulate the issue of warrants is of course a matter of law on which the views of Directors of the LME are not determinative.  In my judgment, however, it would be.  Such regulation is necessary for the provision of the requisite safeguards to investors and the promotion and maintenance of the standards laid down by Schedule 4.  
29.	I therefore hold that in exercising its disciplinary powers over Albatros in relation to breaches of the rules as to the issue of warrants, the Appeal Committee was performing a public function in respect of which its decision is amenable to judicial review.  On that basis I proceed to consider the substantive grounds of challenge to the decision.
Bias
30.	Albatros's first substantive ground of challenge is that the decision was vitiated by bias.  The following matters are relied on:
(1)	One of the members of the Appeal Committee was Mr David King, the Chief Executive of the LME.  Mr King had been involved at the investigation stage and had spoken to Albatros about its conduct (see (2) below).  He then authorised the commencement of the disciplinary proceedings and appointed the members of the Warehouse Disciplinary Committee.  
(2)	Mr King was a witness of fact on one issue before the Appeal Committee.  It arose out of a statement in Albatros's notice of appeal that in a telephone conversation with Mr Meeuwisse, Albatros's Chief Executive, Mr King had "commended the way in which we had acted" in relation to the compensation of third parties affected by Albatros's breaches.  The response by the LME Executive stated: "Whilst Mr King does not recall giving any such general commendation the Executive submits that Mr King should be expected to have commended any suggestion that the dispute between Albatros and the Warrant holders be resolved."  To the extent indicated in that passage it is clear that Mr King had spoken to the Executive about this factual issue, though he had no other input to and was not in any true sense a party to the Executive's submissions.  In the event the Appeal Committee had before it a transcript of the telephone conversation between Mr King and Mr Meeuwisse and was able to form its own judgment on the factual issue.  Its written reasons deal with the matter as follows:  "A transcript of the recorded telephone message clearly showed that the Chief Executive of the LME had not commended the way in which Albatros had acted."   Nonetheless it is submitted by Miss Baxendale that as soon as Mr King was called upon to give evidence in relation to the issue raised by Albatros he should have stood down from the Appeal Committee.
(3)	During the hearing before the Appeal Committee, Mr King asked one of the LME staff, a Mr Hall, about his experience and how this case compared with others.  Mr Hall replied that this was the worst case he had ever seen.  Albatros's solicitor then objected, suggesting that new evidence was being introduced.  The Chairman of the Committee, Mr Farrow, did not want to get embroiled in a debate about the admissibility of the question and therefore asked Mr King to withdraw it, which he did.  It is clear from the evidence that there had been no pre-arrangement between Mr King and Mr Hall about the question and answer and that the matter ended with the withdrawal of the question.  Nevertheless the exchange is relied on as giving rise to an impression of bias.
(4)	On the announcement of the Appeal Committee's decision, it was Mr King who issued the press statement to the effect that the announcement demonstrated the LME's commitment to ensuring that warehousing companies met the required standards.
(5)	Mr King had a direct pecuniary interest in the outcome of the appeal by virtue of his role as Chief Executive of the LME, since any money levied by way of a fine would be paid to the LME.  Similarly the other member of the Appeal Committee had such an interest by virtue of their status as Directors of the LME.  
(6)	A number of general points are made about the composition of the Appeal Committee by one-off appointment from a limited pool of the Board of Directors, the inherent links between the Directors and the LME Executive (the prosecuting authority) and the inherent common causes shared by the Board of Directors and the LME Executive.
31.	It is common ground that the relevant legal principles as to bias are set out in the extremely helpful judgment of the Court of Appeal in Locabail (UK) Ltd v. Bayfield Properties Ltd [2000] 1 All ER 65.  Miss Baxendale relies first on automatic disqualification: see Locabail at page 70 paras 4 et seq.  She submits that Mr King and the Board of Directors were subject to automatic disqualification by virtue of (5) above, i.e. their pecuniary interest in the outcome of the appeal.  Further, she submits that Mr King was subject to automatic disqualification by virtue of his involvement as prosecutor, as shown by (1) to (3) above.  In relation to that she relies on the extension of the rule of automatic disqualification identified in R v. Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No.2) [1999] 2 WLR 272, as summarised in Locabail at pages 71-73 paras 11-14.  Finally Miss Baxendale relies on the general principle that a decision should be set aside if on examination of all the relevant circumstances the court concludes that there was a real danger (in the sense of a real possibility) of bias:  see Locabail at page 73 para 16 et seq.  In support of that she relies on the overall effect of (1) to (6) above.  She also cites R v. Gaisford [1892] QB 381, where a justice was held to be disqualified from adjudicating on a summons for failure to comply with a resolution that the justice himself had moved; R v. Barnsley Metropolitan Borough Council, ex parte Hook [1976] 1 WLR 1052, where it was held that the presence of the prosecutor (namely the market manager, who had also given evidence) throughout the deliberations of the relevant committee vitiated the committee's decision; and Hannam v. Bradford Corporation [1970] 1 WLR 937, where it was held that school governors who had dismissed a teacher should not have sat on a council sub-committee inquiring into whether the dismissal should be prohibited.
32.	Miss Baxendale does not seek to advance any independent submissions as to the effect of the European Convention on Human Rights (and Mr Beloff had signalled clearly and with good reason that any such submissions would be resisted).  She does, however, rely on what is said in Locabail at page 74 para 17 as to the general similarity of outcome of the tests under the English common law and the Convention, and she cites Piersack v. Belgium (1982) 5 EHHR 169 as showing the outcome to be expected in the present case.  In Piersack the impartiality of a trial court was held to be "capable of appearing open to doubt", so as to give rise to a violation of Article 6(1), in circumstances where the court was presided over by a judge who had previously been a senior official in the public prosecutor's department at the time when it decided to prosecute the applicant (and who, it seems, was not only entitled to revise the submissions of, and give advice to, the officials in charge of the file, but also played a certain part in the proceedings).
33.	Mr Beloff submits, and I accept, that the issue as to bias has to be examined within the framework of what Albatros expressly agreed by way of the rules and as regards the specific composition of the Appeal Committee.  Clause I of Schedule C to the contract by which Albatros agreed to be bound provides in terms that the members of the Warehouse Disciplinary Committee are to be nominated by or under the authority of the Chief Executive of the LME, i.e. Mr King.  It seems to me that the Chief Executive's role in authorising the commencement of disciplinary proceedings is implicit in that contractual provision.  Albatros likewise agreed to Clause M, which provides that the Appeal Committee is to consist prima facie of the Board of Directors, subject however to the exclusion of those who have participated in the finding or decision of the Warehouse Disciplinary Committee and those with a financial interest in the matter.  It is plainly not envisaged that the possibility of the imposition of a fine, one of the sanctions set out in Clause J, is to count as a financial interest for this purpose and thereby result in the exclusion of the entire Board of Directors.
34.	In practice, as Mr Beloff again points out, Albatros was given a full opportunity to object to the membership of the Appeal Committee.  By fax dated 31 March to the LME's Mr MacKay, Albatros identified a number of Directors who should not participate in the appeal decision. Mr MacKay's response dated 1 April took issue with one of those listed by Albatros but identified additional Directors who should be ruled out on the ground of a financial interest.  After further exchanges Albatros wrote on 6 April that "we have agreed that the following Board members only will be involved with the Appeal, due to conflicts of interest etc.".  The agreed list included Mr King (an ex-officio member of the Board) and the others who eventually sat on the Appeal Committee.  A question subsequently arose as to whether Mr King would sit, but that was only because of the need to maintain an odd number.  If Mr Farrow sat, as in the event he did, then it was made clear that Mr King would also sit.
35.	Against that background there is plainly no substance to what I would term the institutional features relied on by Miss Baxendale as giving rise to bias.  That includes the role of Mr King in authorising the commencement of the disciplinary proceedings and appointing the Warehouse Disciplinary Committee, the inclusion of Mr King and other Directors of the LME on the Appeal Committee despite the fact that any fine would be payable to the LME, and the general points about the composition of the Appeal Committee and the links and common causes existing between the Directors and the Executive.  These are all matters to which Albatros had given its clear and unequivocal agreement under the terms of its contract with the LME.  Even if otherwise there might be some basis of objection on grounds of bias, Albatros had waived its right to object.  The case would meet the conditions for waiver summarised in Locabail at page 73 para 15 and page 78 para 26.  I would add, however, that none of those institutional features would in my view constitute bias in any event.  The rules make proper provision for the disqualification of any Director with a financial interest in the matter.  As to the fact that any fine would be payable to the LME, there is no evidence that the Directors would stand to gain individually from this and the suggested link seems to me to be too remote to give rise to a disqualifying interest.  If there is any relevant interest at all, it is so small as to come within the de minimis exception recognised in Locabail at page 71 para 10.
36.	In relation to Mr King the objection concerning his authorisation of proceedings forms part of a wider objection that he was the prosecutor in the case.  In my view, however, it would be wrong to regard him as having any substantive role as prosecutor.  His role in relation to the commencement of the proceedings, as in relation to his appointment of the original committee, was an essentially administrative one.  It was the solicitor, Mr MacKay, who acted as prosecutor in the case.  He decided that there was a case to answer and recommended to Mr King that a committee be appointed.  He drafted the list of charges, the Executive's written submissions and all other "prosecution" documents, with no significant input or comment from Mr King.  Thus it was that Albatros took specific (though unsuccessful) objection to Mr MacKay's presence at the appeal hearing, on the ground that he had been the person responsible for presenting the case on behalf of the LME at the previous stage.  Accordingly I do not consider that Mr King's role can be equated with that of the justice who moved the motion in Gaisford, the market manager who was the prosecutor in Hook, the governors in Hannam or indeed the former member of the public prosecutor's department in Piersack.  Mr King did not have the kind of interest that would bring him within the scope of the extended rule as to automatic disqualification applied in Pinochet Ugarte (No.2).  Nor was his role in relation to the prosecution such as to create a real danger of bias if he participated in the appeal decision.  If I were wrong about any of those matters, I would hold that by its clear and unequivocal agreement to Mr King's membership of the Appeal Committee, Albatros had waived any objection on the ground of his involvement as prosecutor.  Albatros knew or (through its agreement to the rules) must be taken to have known of the functions of a Chief Executive in relation to the bringing of the prosecution.
37.	That leaves a number of specific objections based on Mr King's conduct in the course of the proceedings.  First there is the matter of his telephone conversation with Mr Meeuwisse in which he was said to have commended the way in which Albatros had acted as regards compensating third parties.  As to that, the point was at best of marginal significance. In the event, however, its resolution did not depend in any way on Mr King's recollection, since the Appeal Committee had before it, and based itself on, the actual transcript of the telephone conversation.  I reject the contention that Mr King should have stood down as soon as the issue was raised and that his continued participation thereafter vitiated the decision.
38.	Then there is the question that Mr King put to Mr Hall.  It was in my view a proper question.  It was not stage-managed as has been suggested on behalf of Albatros: there was no pre-arrangement between Mr King and Mr Hall. Moreover the question was withdrawn as soon as objection was taken to it.  Although Albatros's solicitor formed an adverse impression of the incident, on the evidence before the court the circumstances were not capable of creating or contributing to any real danger of bias.
39.	Finally, I see no valid basis of objection to the press release.  It was entirely proper for the Chief Executive to issue a press release in such circumstances.  His doing so flowed from his position as Chief Executive and did not compromise, and was not compromised by, his membership of the Appeal Committee.  There is nothing in the terms of the press release that might reasonably be taken to suggest some lack of impartiality by Mr King.   What is said is a fair reflection of the reasons why the Appeal Committee considered that such a large fine was appropriate.
40.	I do not think it necessary to deal specifically with the Convention.  I have mentioned the one authority relied on as in some way illuminating the position.  But the Convention either produces the same result as the common law or, if it produces a different result, cannot assist Albatros in the present case.  The application of Article 6 to disciplinary proceedings when the Human Rights Act 1998 comes into force may well give rise to additional considerations in a case such as the present because of the need for a tribunal to be independent as well as impartial, thereby taking one beyond questions of bias.  That, however, is not something for decision now.
41.	For the reasons I have given, I reject Albatros's submission that the decision of the Appeal Tribunal was vitiated by bias.
Fresh evidence
42.	The submissions made under this head are based primarily on the fact that the Appeal Committee, in deciding the appropriate sanction, had regard to two previous disciplinary decisions without giving Albatros notice of the point or giving it any proper opportunity to deal with it.  A secondary matter on which reliance is placed is the questioning of Mr Hall by Mr King in the course of the hearing; but for reasons already given in the context of bias, nothing turned on that questioning and I do not think it necessary to deal further with it.
43.	The Appeal Committee's written reasons state:
"The Appeal Committee judged the penalty to be commensurate with previous penalties imposed by the LME for far less serious offences.  A £100,000 fine had been imposed on a warehouse for the far less serious offence of placing aluminium on warrant in compounds and there had been a recent £90,000 fine imposed on an LME Member firm for the mis-reporting of large positions."
44.	Miss Baxendale submits that reliance on those two previous decisions amounted to a breach of paragraph (d) of Clause M of Schedule C, which provides that the appellant may make such representations as he thinks fit "provided that no new evidence of fact may be adduced" without good reason why it was not adduced in the proceedings before the Warehouse Disciplinary Committee.  I reject that submission.  The provision in question is clearly aimed at the appellant and the previous decisions are not "new evidence of fact". 
45.	The further submission made is that it was procedurally unfair to rely on the previous decisions without giving Albatros notice or an opportunity to comment.  Had Albatros been given such an opportunity, it would have pointed out that the first of the decisions related to two separate (though obviously related) companies and that 75% of the fine of £100,000 was suspended on condition that they did not materially breach the conditions of the contracts between them and the LME for a period of 12 months.  
46.	I do not consider it inherently unfair for a body such as the LME, when considering the appropriate sanction for breach of its rules, to take into account its own published disciplinary decisions without giving a party to disciplinary proceedings notice and a specific opportunity to comment on them. Such decisions amount to published precedents the potential relevance of which is obvious.  Those who are subject to disciplinary proceedings know or ought to know of their existence and are free to make such reference to them as they wish in the course of their own submissions.   That is not to say that fairness would never require the giving of an opportunity to comment.  The  individual circumstances of the present case, however, do not require it.   The analogy with court proceedings was explored in the course of argument.  In my judgment it is not generally incumbent on a sentencing court (or a court hearing an appeal against sentence) to give a party notice of reported decisions which the court is minded to take into account when determining the appropriate sentence, though there may be circumstances where it would be right to draw attention to a particular authority before relying on it.  To the extent that the analogy is helpful, it tells against Albatros.
47.	Moreover there is no reason to believe that the Appeal Committee was unaware of the fact that, in one of the cases referred to, 75% of the fine of £100,000 was suspended; nor, therefore, is there any reason to believe that representations on behalf of Albatros as to the nature of the sanction in that case might have affected the Appeal Committee's judgment about the appropriate sanction in the case of Albatros.  What is given in the written reasons does not purport to be a complete statement of what the Appeal Committee considered in relation to that earlier case.  It is obviously only a summary.
48.	I do not accept an additional submission by Mr Beloff that the precedents did not form the basis of the decision, which was taken on independent grounds, but were put forward as justifying a decision already taken on those other grounds.  On a fair reading of the written reasons the previous decisions are relied on as a strand in the overall reasoning by which the decision is reached.  But in view of the conclusion that I have already reached as to the absence of unfairness in the approach taken by the Appeal Committee, nothing turns on this point.  I reject Albatros's case under the head of fresh evidence. 
Failure to have regard to material considerations
49.	The first matter raised under this head is the submission that the Appeal Committee failed to have proper regard to previous fines imposed by it on other warehouses or traders, so as to create consistency and fairness in its approach to regulation and breaches of conditions.  The submission rests in part on the suggestion that the Appeal Committee misdirected itself as to the true nature of the previous fine of £100,000 to which I have referred in considering the issue of fresh evidence.  To a substantial extent I have dealt with the point in that context, observing in particular that what appears in the written reasons is simply a summary of the previous decision rather than a full exposition of it.  Although the submission is elaborated in the present context, I think it sufficient to record that in my judgment there was no misdirection in any of the respects alleged and there was no failure to take the circumstances of the previous case into consideration. 
50.	The other aspect of the submission as to previous fines is that Albatros has adduced, for the purposes of the present proceedings, details of fines in a number of other cases (post-dating as well as pre-dating the decision under challenge) and contends that the Appeal Committee failed to have regard to them or to carry out a proper exercise of comparison between the circumstances of those other cases and of the present case.  I have been referred to some of the details of the previous cases in order to show their potential relevance to the level of fine for Albatros.  In my view there was no obligation on the Appeal Committee to take into account the details of the previous cases on which Albatros chooses now to rely.  It was certainly entitled to look at previous cases and to take them into account in the way that it did - the point considered under the head of fresh evidence.  But it was not required to do so or to go further than it did.  If Albatros wished to put forward previous cases in support of its contention that the level of fine imposed by the Warehouse Disciplinary Committee was too high, it was free to do so; and the Appeal Committee would then have been bound to take them into account.  The very fact that Albatros did not adopt that course may tell one something about the significance or otherwise of the cases in question.  Leaving that aside, however, I am satisfied that any failure by the Appeal Committee to take into account previous cases on which Albatros had placed no reliance in support of its appeal was incapable of vitiating the decision reached.
51.	A separate submission is that the Appeal Committee failed to take any proper account of Albatros's willingness to compensate traders affected by the breaches.  The argument advanced by Albatros in support of its appeal had been that, although Albatros was legally protected under the FENEX conditions, it chose not to avail itself of that protection but to act in the interests of LME brokers by compensating the majority of those affected.  The submissions of the LME Executive had cast substantial doubt on the strength of that point as a mitigating factor, whilst also observing that any exclusion of liability under the FENEX conditions did not affect Albatros's responsibility to the LME for breach of the conditions contained in its contract with the LME.  The written reasons for the Appeal Committee's decision deal with the matter in this way:
"Albatros also claimed that they were not bound by the conditions of the LME Warehouse Contract in so far as they imposed obligations which were in conflict with the limits of responsibility contained in the FENEX, the Dutch forwarding Conditions which operate in the Port of Rotterdam.  The Appeal Committee did not accept this claim.  Albatros had signed the Warehouse Contract with the LME without qualification and its obligations under the Contract relating to disciplinary matters were not reduced by the FENEX terms of business."
52.	That is a clear misunderstanding of the argument put forward by Albatros, as Mr Beloff has conceded.  It is submitted by Miss Baxendale that the Appeal Committee thereby failed to have regard to a material consideration and expressed the matter in a way which was liable adversely to affect its consideration of Albatros's position.  
53.	I do not think that this admitted error was sufficient to vitiate the Appeal Committee's decision.  Looking at the written reasons as a whole, I am satisfied that the Appeal Committee did take into account Albatros's claim to have compensated the majority of those affected and that its misunderstanding of the argument that such compensation went beyond Albatros's legal obligations was not a material factor in the overall decision as to the level of fine.  
Grossly disproportionate sanction
54.	The final ground advanced by Albatros is that the sanction imposed, in particular a fine of £200,000 and costs, was grossly disproportionate to the offences.  It was unprecedented and far in excess of any fines imposed in other cases.  As to the power of the court to interfere in such a case, reliance is placed on R v. Admiralty Board of the Defence Council, ex parte Coupland (Division Court, 18 July 1995, unreported), which applied R v. St Alban's Crown Court, ex parte Cinnamond [1981] QB 480.  Those cases show that the underlying principle is, or is equivalent to, that of Wednesbury unreasonableness.  Miss Baxendale did not seek to put her submissions on any basis other than that the fine in this case was so disproportionate as to be Wednesbury unreasonable.
55.	She submitted that the sanction was grossly disproportionate in the light of (1) the nature of the offences themselves, (2) the fact that they arose from mistakes and there was no dishonesty or deliberate breach by Albatros, (3) the level of fines and other sanctions imposed in the past in respect of similar or other breaches by LME warehouses, (4) the fact that the mistakes, once they came to light, were quickly and readily admitted by Albatros, (5) Albatros's pleas of guilty to all relevant charges except that of bringing the LME into disrepute, (6) the steps taken by Albatros to mitigate the effects of its mistake and to offer to compensate traders who had suffered loss, (7) the financial loss suffered by Albatros as a result of taking such steps, (8) the low level of profits which Albatros derived from its position as an LME listed warehouse and the severe effects such a large fine would have on it, (9) the consequences of the imposition of the fine coupled with the costs of the management consultancy audit in terms of Albatros's continuing viability as an LME warehouse, and (10) the costs of the management consultancy audit itself.
56.	The factual basis for those points is developed in Albatros's evidence, especially the affidavit of Mr Meeuwisse. The points are also considered in the LME's evidence, in particular in the form of a commentary in Mr Farrow's second affidavit.  I have considered the relevant material but do not propose to set out further details.
57.	In my judgment the Appeal Committee was entitled to take a very serious view of Albatros's conduct in this case.  The committee was exercising an important regulatory function, as is reflected in my finding that its decision is amenable to judicial review.  It was an expert body which was well placed to assess the needs of the market, the impact of a breach of the rules and what was required in order to deter future breaches and secure confidence in the market.  The court does not have the same expertise in such matters.  I have already referred to the reasons why the committee took a particularly serious view of Albatros's conduct and decided that a severe sanction was appropriate.  They are reasons of substance and were given careful consideration. The committee had regard to the various points of mitigation advanced by Albatros and even reduced the fine by £50,000 because of Albatros's financial position.  The previous cases relied on by Albatros were all very different factually and were less serious than the present case.  
58.	In light of those considerations I have come to the clear view that there is no basis for intervention by the court in relation to the level of fine imposed in this case.  It cannot be said that it was a grossly disproportionate sanction or that the decision to impose it was Wednesbury unreasonable.
Conclusion
59.	Although I hold that the decision of the Appeal Committee is amenable to judicial review, Albatros has failed to persuade me that the decision was unlawful in any of the respects put forward.  The application for judicial review is therefore dismissed.

Ruling on orders consequential upon the judgment (this ruling does not form part of the judgment itself but follows on for convenience)

1.	I have handed down the judgment while out on Circuit.  By consent of the parties, consequential orders have been the subject of written submissions so as to make it unnecessary for the parties to attend at court.  I am grateful to counsel for their submissions and for their typographical corrections to the draft judgment.
2.	The application for judicial review is dismissed.
3.	The applicant is to pay three-quarters of the respondent's costs, to be subject to detailed assessment if not agreed.   The order reflects the fact that, although the applicant was ultimately unsuccessful, it did win on the threshold issue of amenability to review, which required substantial preparation and took up a substantial amount of time in court.   That is a matter properly taken into account as part of the overall circumstances in the exercise of the court's discretion as to costs under CPR Rule 44.3.  I do not consider that the debate over the written reasons ought to affect the costs order.   Nor do I consider that the applicant's conduct of the proceedings was such as to justify requiring it to pay the whole of the respondent's costs despite the fact that it won on the amenability issue. In particular, the costs of setting aside the stay (in respect of which the applicant's conduct was indeed open to criticism) were awarded to the respondent in any event and it is not appropriate to impose a further penalty for the applicant's conduct.
4.	Permission to appeal refused.  In my view an appeal does not have a realistic prospect of success on any of the issues in respect of which I have decided against the applicant.  The case does not raise points of principle of such importance that they ought to be considered by the Court of Appeal even in the absence of a realistic prospect of success.  The financial hardship faced by the applicant is not a good or sufficient reason for granting permission to appeal.