13 May 2019

In February the High Court ruled that the European Medicines Agency's £13 million a year lease of premises at Canary Wharf will not be frustrated by Brexit. That may not be the end of the story, however, as the case is now going to the Court of Appeal.
 
If frustration were held to apply, this would result in the lease coming to an end and the EMA being able to walk away from its liabilities. The EMA's decision to appeal is therefore no surprise, as the lease term runs until 2039 and there is around €400 million at stake.

Granting leave to appeal, Mr Justice Smith said the case had "significant ramifications" and that an appeal could have "a real prospect of success".   

The High Court ruled that neither Brexit nor the EMA's shift of headquarters from London to Amsterdam would constitute a "frustrating event" and that the EMA would remain liable to perform its obligations. The lease set out terms on which the EMA could assign or sub-let.  If they wanted to leave but were not able to assign or sub-let on the terms agreed, they would retain the premises and continue to be bound by their obligations.

It is possible that the Court of Appeal will not hear the case until March 2020, which means a further period of uncertainty for the property industry and the UK economy as a whole. If the High Court decision were to be reversed, this might encourage other claimants to argue that contracts were frustrated as a result of Brexit. The appeal decision will therefore be keenly awaited.