In March 2019 we wrote about the decision of the High Court in Canary Wharf v European Medicines Agency where the court rejected the argument by the tenant, EMA, that Brexit had the effect of terminating a lease by the doctrine of "frustration". The HQ of the EMA had been based in London but following the EU referendum the EU decreed that the HQ of EMA needed to move to Amsterdam. However EMA's lease of offices in Canary Wharf was not due to end until 2039 and the lease did not contain a break clause. EMA issued proceedings against its landlord arguing that the lease had come to an end as the purpose for the lease as a HQ for EMA would disappear. The High Court judgment confirmed that Brexit will not interfere with existing landlord tenant relationships and that tenants are not entitled to exit from their lease commitments. Whilst this was a legally unsurprising decision, it was still welcome news for landlords of European businesses faced with uncertain futures.
Given the decision, EMA was left facing ongoing lease costs of rent, service charge and rates amounting to £500m. As such, despite the perhaps limited prospects of successfully appealing the decision, it was unsurprising that EMA applied to appeal the judgment. Faced with such numbers the costs of the appeal were probably worth risking. The market was left waiting to see what would be decided on appeal. However it has recently been announced that the appeal will be withdrawn as EMA has completed a sublease of the whole of the property to flexible workspace provider WeWork. WeWork has already started fitting out the premises and aims to open the offices in December this year. The deal will apparently create one of the largest serviced office spaces in the world.
Now that the appeal has been withdrawn the judgment of the High Court stands. In this area at least any potential Brexit uncertainty has been removed.