Risky Business | Series 2, Episode 1 | Commercial contracts - margin calls

Anna Myrvang and Fred Feistauer discuss the case of Elliott Associates LP & Anor, R. (On the Application Of) v The London Metal Exchange & Anor [2024] EWCA Civ 1168 and the impact of margin calls on business relationships.

This judicial review decision provides a useful framework for discussing the nature and impact of margin calls on businesses, including in particular in the case of borrowers and lenders. The decision is interesting because it illustrates the potential impact of significant margin calls in the course of parties’ relationships.

While the decision is quite unique, it features many of the issues that we have found in the past to give rise to disputes where parties enter into agreements that allow for margin calls, including disputes over their calculation and their periodicity. The decision also allows a brief exploration of what constitutes a disorderly market and the consequences that this may have.