Mercuria v Baltic Exchange: The Legal Uncertainty Surrounding Freight Benchmarks

The Baltic Exchange in London, whose TD3C benchmark is at the centre of Mercuria’s High Court claim.

Global commodities giant Mercuria has brought a High Court claim against the Baltic Exchange over TD3C, a key tanker freight benchmark used to assess the cost of transporting crude oil from the Gulf to China. TotalEnergies’ trading arm, Totsa, is also reportedly considering a similar claim, indicating a growing concern over the accuracy of freight benchmarks during periods of severe market disruption.

The London-based Baltic Exchange provides independent maritime market data, publishing daily benchmarks for physical and derivative shipping contracts. TD3C is one of the benchmarks that is relied upon by traders, charterers, and other key players in the industry to calculate the costs of transporting crude oil from the Gulf to China by very large crude carrier (VLCC). This benchmark is not merely a market indicator but a highly trusted source of pricing data that directly determines financial obligations under the contracts linked to it.

The issue here then has arisen regarding the reliability of the TD3C benchmark, as the route it measures was heavily disturbed by the Strait of Hormuz blockade. According to

The Financial Times, Mercuria claims that it has lost “hundreds of millions of US dollars” because the benchmark allegedly misrepresented the underlying freight market it was intended to measure.

Mercuria’s argument is therefore not simply that freight rates increased, but that the Baltic Exchange should not have continued publishing TD3C under its usual methodology when the market was allegedly too disrupted for the benchmark to remain reliable.

The reports show that at the beginning of the year, the same benchmark was around $29,000 per day, which has increased to more than $400,000 per day as a result of the disruptions in the Middle East.

The Baltic Exchange has provided multiple lines of defence in response to Mercuria’s claims. It insisted on the fact that Mercuria cannot prove that the Strait of Hormuz was legally closed to lawful shipping, despite the severe disruption affecting the route. It also argues that its benchmarks are produced in line with the established governance frameworks and methodologies.

In addition, the Baltic has criticised Mercuria’s decision to pursue the matter through private litigation, arguing that the concerns over benchmark methodology should be addressed through regulatory oversight, particularly as Mercuria had already made a complaint to the Financial Conduct Authority.

So far, recognising the importance of the benchmark to the shipping market, Mr Justice Christopher Butcher has ordered the case to proceed on an expedited basis, with the trial scheduled for 26 October.

The Financial Times also reported that, although TotalEnergies declined to comment, Totsa, TotalEnergies’ trading arm, is considering bringing a similar claim against the Baltic Exchange. This demonstrates a serious possibility of further litigation from commodity traders and energy companies whose contractual agreements relied on the same benchmark.

The case is particularly important as it may clarify whether benchmarks are expected to respond when severe market disruptions affect the route or whether they must adhere to their established methodologies to preserve market certainty. Ultimately, the court may also have to consider that upon imposing liability on the benchmark provider, it could open the floodgates to litigation from market participants whose contracts were priced by reference to these published rates.