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EMA withdraws appeal against finding that Brexit did not ‘frustrate’ London lease

Out-Law News | 08 Jul 2019 | 2:11 pm | 1 min. read

The European Medicines Agency (EMA) has withdrawn an appeal against a court ruling that Brexit would not stop it from carrying out its obligations under its lease for its former London headquarters.

The EMA said it had now reached agreement with its landlord over the future of its premises in London and has sublet all its space until its lease expires in 2039.

The agency relocated to Amsterdam in March 2019 in the wake of the UK's EU referendum result, but its 25-year London lease, signed in 2014, did not contain a break clause.

The EMA argued before the High Court earlier this year that the legal doctrine of frustration applied to bring the lease to an end. It said Brexit would trigger a number of legal changes relating to its legal capacity to continue with the lease. Its case was based either on frustration of 'common purpose' – that is, its ability to provide EMA services within the EU – or on subsequent legal changes and supervening illegality.

However, the High Court threw out the case, with the judge saying that the EMA would be able to continue to meet its obligations under the lease after Brexit, and that the Agency had entered into the lease without a break clause “quite consciously”.

The lease agreement allowed the EMA to sublet or assign space in the Canary Wharf offices, subject to landlord consent.

Property litigation expert Matthew Baker of Pinsent Masons, the law firm behind Out-Law, said: “The sub-letting deal that EMA have now done to mitigate its rental liability for the remaining term of its lease is most likely a reflection of the possible lack of merit in its appeal, based on the particular facts of this case. It is also another example of how property disputes like this can be resolved in pragmatic and creative ways to avoid the costs and risks of litigation.”

The European Banking Agency (EBA) also moved out of London as a consequence of Brexit, relocating to Paris earlier this year.