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Hedging: where is the dividing line?

7 April 2025 / Author(s): Simon Clarke , Nihar Lovell , Catherine Bagge
Issue: April 2025 / Categories: Feature

Hedging is a risk management practice commonly adopted by financial institutions and corporations to manage their exposure to risks like movements in interest rates, currency fluctuations, or commodity price fluctuations. This article highlights the legal distinction between “internal” and “external” hedging, as discussed in Rhine Shipping DMCC v Vitol SA.1 It then considers the implications of this legal distinction and practical steps to mitigate any associated litigation risks.

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