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Newsflash: Canary Wharf Brexit frustration dispute settled

The idea of a 'Brexit' represented via jigsaw puzzle. 3D rendering graphics. Print publication

12/07/2019

We reported, in February this year, the High Court’s decision in Canary Wharf v EMA [1] that Brexit will not frustrate (and therefore effectively terminate) the European Medical Agency’s lease at Canary Wharf.

The High Court’s decision was generally welcomed because, had the High Court found for the EMA, countless leases and commercial contracts throughout the UK and even internationally could also have been immediately vulnerable, as other parties may have been tempted to rely on the case to seek to terminate arrangements which Brexit rendered unfavourable.

We understand that the EMA has now announced that it has settled its dispute with its Canary Wharf landlord and has sublet its premises for the remainder of the lease. As such, EMA will not now be appealing the High Court’s decision, as it had previously threatened to do.

The High Court’s overall finding in favour of the landlord will no doubt stem the flood of lease and commercial contract frustration claims that could have flowed from a decision the other way. The judgment also emphasised how difficult it can be to succeed with a frustration claim under English law and demonstrates the very wide range of factors that the court can take into account when assessing a claim against the high bar required.

The decision did, however, leave a number of issues unanswered. For example, the judgment confirmed that Brexit was not relevantly foreseeable prior to 2016 (or thereabouts) and it acknowledged the principle that, in factual and contractual scenarios other than those in this particular case, it might well be possible for Brexit to amount to a frustrating event.

It seems, therefore, that the gates have been left open for future claims, and Court of Appeal guidance on this highly topical issue will not now be forthcoming.

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[1] [2019] EWHC 335 (Ch)

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