U.S. hedge fund Elliott Associates and Jane Street Global Trading are invoking the Human Rights Act as they seek to sue the London Metal Exchange (LME) for a combined $472 million over its decision to cancel nickel trades in March.

The nickel trading debacle is the biggest crisis to hit the world's oldest metals forum in decades.

Elliott and Jane Street, which are demanding damages of $456.4 million and $15.34 million respectively, are seeking a judicial review after the nickel price topped a record of $100,000 per tonne on March 8, prompting the LME's suspension of nickel trading and voiding of trades.

The two groups allege the LME acted unlawfully, breached its published policies, was disproportionate, favoured some market participants over others and violated their rights under the European Convention of Human Rights to the "peaceful enjoyment" of possessions, documents filed with London's High Court show.

The LME, which is owned by Hong Kong Exchanges and Clearing, is resisting the claims, saying unprecedented market conditions caused a "disorderly" market and that it wanted to protect stability and integrity and avoid multiple defaults.

The LME is expected to file a more detailed response if London's High Court grants permission for a judicial review.

The case will test the LME's rules, which Elliott alleges lack clarity, guidance and precedence about when the exchange can use its cancellation powers - unlike the clear and detailed provisions about procedures that apply in the event of a default.

On the morning of March 8, the LME calculated that traders with short positions would have had to deposit a total of $19.7 billion in cash or collateral with the exchange's clearing house, LME Clear, to cover potential losses in the event of a default by an LME member bank or broker, the court documents seen by Reuters show.

"The action which the LME took was within its powers, and those powers were exercised fairly," an LME spokesman said on Thursday. "At all times, the LME sought to act in the interests of the market as a whole.

"The LME therefore continues to consider that Elliott's and Jane Street's grounds for complaint are without merit, and the LME will defend any judicial review proceedings vigorously."

Elliott declined to comment. Jane Street did not have any immediate comment.