Payne Hicks Beach

Payne Hicks Beach

18 January 2019

Canary Wharf v EMA - Brexit lease battle begins

Comment from Scott Goldstein, Associate in the Dispute Resolution department and property litigation specialist at Payne Hicks Beach in light of a dispute between the European Medicines Agency (EMA) and the Canary Wharf Group, first published at EG online on 16 January 2019 and reproduced with kind permission.

The dispute is over a £500m 25-year lease the EMA signed in 2011 but which EMA wants to exit because, it asserts, Brexit has forced it to relocate to mainland Europe. The EMA argues that Brexit has frustrated the lease, thereby discharging both parties from their contractual obligations thereunder. Canary Wharf Group disputes the claim, stating that EU membership has been a divisive issue for many years, and that Article 50 has been enshrined in law since 2009.

Scott comments on this case and the widespread ramifications that there could be if EMA is successful.

"Many of the hitherto leading cases on frustration relate to losses which businesses suffered following the postponement of King Edward VII's coronation  in 1902.  A contract that is frustrated automatically ends immediately, and the parties discharged from further obligations thereunder.   However, partly because the job of any lawyer is to expect the unexpected, cases relying on frustration tend to be relatively rare.  Frustration also creates uncertainty, which is another reason why courts frown on it.  

I expect that EMA will need to persuade a court that the parties never could have contemplated Brexit when the lease was granted.  Canary Wharf will probably argue that it was always a possibility, given the fraught relationship between Britain and the rest of the EU going back decades, and the fact that the article 50 was incorporated into UK law in 2009.  Without predicting the outcome, the Court will think carefully before setting a precedent which might open the floodgates to similar cases, thereby creating even more uncertainty in a market which is already suffering the effects of the current stalemate at Westminster." 

Click to read the full article in EG online - https://www.egi.co.uk/news/canary-wharf-v-ema-brexit-lease-battle-begins/

For further information, please contact Scott Goldstein by email or on 020 7465 4300

 

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