Monday, 8 July 2019

EMA Drops Brexit Frustration Appeal

The EMA has settled its case with Canary Wharf Group (CWG) and has announced it has sublet the whole of its premises at 30 Churchill Place, Canary Wharf to WeWork.

WeWork will take a new sublease from EMA for a term lasting until the expiry of EMA’s lease in June 2039.

EMA relocated to Amsterdam in March 2019 because of the outcome of the Brexit referendum and the subsequent serving of the Article 50 notice.

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

The High Court decided in February 2019 that the EMA’s lease had not been frustrated by Brexit, following an application by CWG for a declaration.

EMA has now agreed with CWG that it will withdraw its appeal against that decision of the High Court.

The original High Court decision will therefore still stand.

The High Court litigation provided a useful examination of the doctrine of contractual frustration and a reminder of how narrowly it applies.

It also provided a timely indication of how difficult it’s likely to be to prove that Brexit has frustrated a contract, although it hasn’t ruled it out in the case of contracts entered into before Brexit became reasonably foreseeable.

It’s disappointing from the point of view of a legal observer that these arguments will not be further tested in the Court of Appeal, although it certainly seems to be a more satisfactory outcome for the parties to this litigation.

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