EU body to withdraw appeal over impact of Brexit on lease after reaching deal with Canary Wharf

The European Medicines Agency (EMA) has reached an agreement with Canary Wharf Ltd over its premises at 30 Churchill Place, London, and will withdraw its appeal against a High Court ruling that Brexit would not frustrate the lease of the property.

EMA said its decision was in accordance with discussions held with the EU budgetary authorities.

The organisation has sublet all of its 284,704 square feet (26,450 m2) of accommodation at 30 Churchill Place to WeWork.

WeWork will take a new sublease from EMA for a term to the expiry of EMA’s lease in June 2039. WeWork is commencing the fitting out and is looking to open in December 2019. 

EMA relocated to Amsterdam in March 2019 as a consequence of the outcome of the UK‘s referendum on its EU membership.

The lease on its Canary Wharf premises runs until 2039 and does not contain a break clause, but the premises can be sublet or assigned subject to the landlord’s consent.

As a result of EMA’s deal with Canary Wharf, the original High Court decision will therefore still stand. In February 2019 Mr Justice Marcus Smith ruled against the agency in Canary Wharf (BP4) T1 Ltd & Ors v European Medicines Agency [2019] EWHC 335 (Ch).

The judge concluded that:

  • The lease would not be frustrated on the withdrawal of the United Kingdom from the European Union.
  • This was neither a case of frustration by supervening illegality nor one of frustration of common purpose.
  • The lease would not be discharged by frustration on the United Kingdom's transition from Member State of the European Union to third country nor did the EMA's shift of headquarters from London to Amsterdam constitute a frustrating event.
  • The EMA remained obliged to perform its obligations under the Lease.

Commenting on the withdrawal of EMA’s appeal, Gwendoline Davies and Martin McKeague of Walker Morris said: “The High Court’s overall finding in favour of the landlord will no doubt stem the flood of lease and commercial contract frustration claims that could have flowed from a decision the other way. The judgment also emphasised how difficult it can be to succeed with a frustration claim under English law and demonstrates the very wide range of factors that the court can take into account when assessing a claim against the high bar required.

“The decision did, however, leave a number of issues unanswered. For example, the judgment confirmed that Brexit was not relevantly foreseeable prior to 2016 (or thereabouts) and it acknowledged the principle that, in factual and contractual scenarios other than those in this particular case, it might well be possible for Brexit to amount to a frustrating event.

“It seems, therefore, that the gates have been left open for future claims, and Court of Appeal guidance on this highly topical issue will not now be forthcoming.”

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