Posted by Andrew Kuemmerle, Solicitor
High Court rules that Brexit cannot frustrate commercial leases
Commercial landlords have received some welcome certainty with regards to Brexit. The High Court has ruled that tenants will not be able to use Brexit as an excuse to break their lease.
In Canary Wharf (BP4) T1 Ltd v European Medicines Agency (EMA), the EMA argued that their lease for office space in the East London district was ‘frustrated’ as it had no choice but to leave London.
Frustration is a doctrine under English law whereby an events occurs that fundamentally changes the performance of a contract so that it would be unjust to make the parties continue to perform it.
Judge Marcus Smith found that Brexit did not amount to frustration and that the agency will remain bound to its £13 million per year lease, which has another 21 years remaining.
The parties will now hope to find a mutually beneficial solution, such as sub-leasing the office space with the landlord’s consent. The EMA indicated that they may appeal the judgment to the European Court of Justice.
The ruling provides great relief to UK commercial landlords. Had the decision gone in favour of the EMA, many other multi-national organisations, most notably major banks, could have been afforded the option to break their lease on the grounds of Brexit frustration in order to relocate abroad.
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