The High Court has rejected an argument that the European Medicines Agency’s (EMA’s) lease of premises at Canary Wharf will be frustrated as a result of the UK’s withdrawal from the EU: Canary Wharf (B4) T1 Ltd and others v European Medicines Agency  EWHC 335 (Ch).
The EMA argued that, as a result of Brexit, and as a matter of EU law, it would lack capacity to make use of the premises or perform its obligations under the lease, and therefore the lease was frustrated under English law. The judge rejected the EMA’s case that it would lack such capacity under EU law, and in any event found that an intervening lack of capacity under foreign law, after the contract had lawfully been entered into by the relevant foreign party, would not be relevant to questions of frustration under English law.
Overall, the decision illustrates the uphill struggle that is likely to face a party seeking to establish that its contracts are frustrated as a result of Brexit. The EMA is in a fairly unique position, as a European agency with good reasons to be located in an EU member state – even if the judge rejected its case about a broader lack of capacity to make use of premises located elsewhere – and it could not succeed in establishing its case on frustration. In principle, however, the decision leaves open the possibility of establishing frustration where a party is able to show that, as a result of Brexit, it will be deprived of all or substantially all of the benefit of a contract, or that it will simply not get what it bargained for, rather than performance merely becoming more onerous or inconvenient.
The EMA is reported to be studying its options for appeal, so this may not be the last word on the issue.