A landmark case puts Brexit into consideration as a frustrating event

Legal Guidance on Dispute Resolution

Brexit frustrations boil over: European Medicines Agency claim against Canary Wharf

A landmark case has been heard in the High Court this month and judgment is keenly awaited. The European Medicines Agency (EMA) signed a 25 year lease in 2014 for 10 floors of office space with Canary Wharf Group, the value of which being £500,000,000. It is the EMA’s position that Britain’s decision to leave the European Union was unforeseen and thus represents a frustrating event allowing for termination of the lease.

What is Frustration?

Frustration is a property law doctrine whereby a contract is discharged on the basis that an event renders the contract physically or commercially impossible to fulfil, or transforms the obligation to perform into a radically different obligation from that undertaken at the moment of entry into the contract. To be a frustrating event, it must be so fundamental as to go to the root of the contract and be entirely beyond the contemplation of the parties when entering the contact.

Referring to the present proceedings, the EMA argue that Brexit was not contemplated when the lease was entered into and its implications do go to the root of the contract. EMA is moving its 900 jobs to Amsterdam due to its purpose of serving a European Union that Britain will no longer be a part of.

Is Brexit a frustrating event?

The outcome of these proceedings has the potential to have wide-reaching ramifications for the British property market, were Brexit to be ruled a frustrating event, particularly in the context of many businesses currently evaluating the need and extent of offices in the UK. However, it is important to keep in mind the large implications of Brexit for the EMA as an EU agency specifically, were the results of these proceedings to fall in their favour. Doubtless few other bodies could argue that Brexit has such fundamental ramifications on their ability to operate.

For now though, all that can be said is watch this space!

If you have any property issues related to this article or otherwise, please contact James Millis or Allis Beasley