Reuters reported that trading platform globalCOAL had won its second court dispute in 3 years with London Commodity Brokers, allowing it to require electronic trading based on its coal contracts to take place on its own platform.

GlobalCOAL's SCoTA standardized coal contract which it developed 10 years ago and licenses to LCB among other brokers and counterparties has become the standard contract for the majority of spot trading in the major coal benchmarks.

Mr Eoghan Cunningham CEO of globalCOAL said that the latest judgment means that any electronic trading of coal using SCoTA or a contract very similar to it can take place only via globalCOAL.

He said that Brokers London Commodity Brokers and GFI want to broker physical coal on their own electronic systems as the worldwide market has grown during the past 5 years with a host of new entrants in Asia. Other brokers, which have signed agreements to use SCoTA must pay royalties on transactions are restricted to using counterparties who have also signed and can only use it for voice broking.

The suit was a bid by LCB to throw off the restriction against brokering on-screen. The first court judgment in globalCOAL's favor against LCB was in March 2008. The company has also won judgments against GFI and ICAP.

LCB said in a statement that it had argued for a narrow interpretation of the licence agreement to mean only globalCOAL's intellectual property rights. LCB argued that the product licensing agreement was limited to protecting intellectual property in other words to prevent trading by reference to trade marks, copying and distribution of SCoTA and that the PLA did not cover the use of SCoTA in brokering.

Mr Cunningham said that the latest ruling is not likely to be the last of legal disputes over the issue. He said that LCB has been given leave to appeal and we expect them to do so.

(Sourced from Reuters)