From 16 January 2019 for six days the Business and Property Courts in London are hearing a claim by the commercial landlord, Canary Wharf Ltd, that the European Medicines Agency, which is to move to the Netherlands on Brexit, is bound by its 25 year lease for premises in the East London development, which it signed in 2011, almost 5 years before the Brexit referendum.
EMA argue that the lease is "frustrated" by Brexit, on the grounds that Brexit could not have been reasonably contemplated by the parties when the lease was signed, and that it would be unjust to hold it to the lease terms.
The trial, of what will be a key Brexit related decision for the legal and real estate communities, was expedited. It is to be hoped that the decision of Marcus Smith J will be available within the next few weeks.
Cases pleading the doctrine of frustration are very rare, with the courts in past decades restricting the application of the doctrine in the interests of contract certainty. Although the decision in this case will, arguably, only have direct application in the real estate sphere, it is likely that some aspects will be relevant to other types of contract affected by Brexit, particularly the question whether Brexit could have been in the reasonable contemplation of the parties in 2011. Even if Marcus Smith J decides that it couldn’t, he may nevertheless decide that Brexit doesn't so significantly change the nature of the parties' outstanding contractual obligations that it would be unjust to hold them to their bargain.
We will report on the outcome when the decision is available.