Canary Wharf wins High Court battle over lease with the EU's European Medicines Agency
PUBLISHED: 13:21 20 February 2019 | UPDATED: 13:33 20 February 2019
A major European Union agency has failed in a High Court bid to use Brexit to get out of an estimated £500million bill for its Canary Wharf lease.
The European Medicines Agency (EMA) argued that its 25-year lease has been “frustrated” by the UK’s imminent departure from the EU, meaning it should not have to comply with the terms of the lease after Brexit.
But Canary Wharf took the agency to court to enforce the lease, saying that “however ‘hard’ or ‘soft’ Brexit may be, it is not sufficient to frustrate the lease”.
Giving judgment in London on Wednesday, Mr Justice Marcus Smith ruled that the EMA’s lease “will not be frustrated on the withdrawal of the United Kingdom from the European Union”.
The judge added: “The lease will not be discharged by frustration on the United Kingdom’s transition from member state of the European Union to third country, nor does the EMA’s shift of headquarters from London to Amsterdam constitute a frustrating event.
“The EMA remains obliged to perform its obligations under the lease.”
At a hearing in January, Canary Wharf’s barrister Joanne Wicks QC argued that “Brexit is worlds away from the type of event that may be capable of frustrating a long lease”.
She added that “Brexit, whatever it means and however it happens, falls well short” of meeting the test to prove the lease had been frustrated.
Ms Wicks also warned that “if the EMA were to succeed in this claim, other tenants might be tempted to follow suit, with significant consequences for the property market”.
The EMA, which evalutates and monitors medicines across the EU, has been based in London since its formation in 1993, but is due to relocate to Amsterdam after Brexit.
The agency argued that it is under a “legal obligation” to leave London for Amsterdam, meaning it “faces paying ‘double rent’ for 21 years” until its lease expires in 2039, which it said would be “hugely unfair”.
Jonathan Seitler QC, for the EMA, said: “This is as rare and as exceptional a case as the court will ever see.
“If the doctrine of frustration does not apply to this lease and in these exceptional circumstances, then it is hard to see when it ever would.”
He argued that it was “necessary to ‘vindicate justice’ to release the EMA from its onerous obligations so that the parties can - like the UK and the EU - go their separate ways as amicably as possible”.
But, in his judgment, Mr Justice Marcus Smith said: “This is a case where the legal effects on the EMA of the United Kingdom’s withdrawal from the European Union could have been, but were not, ameliorated by the European Union.
“This failure to do so is relevant to the question of frustration and, in my judgment, renders the frustration of the lease self-induced.”