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£500 million win for Canary Wharf judgment is a huge relief for landlords

The Canary Wharf Group was victorious yesterday in its case against the European Medicines Agency (EMA) over a claim that Brexit is an event which ‘frustrates’ its lease of its offices, allowing the EMA to terminate its lease. A loss could have seen Canary Wharf lose up to £500 million in rent.

A win for the EMA in this case would have been hugely concerning for commercial landlords in general. It could potentially have led to any number of tenants affected by Brexit to try copycat ‘frustration’ claims – legitimate or otherwise. Financial services businesses, for example, could potentially have tried to argue that it is impossible for them to operate in the UK without passporting rights.

While the EMA should be able to successfully assign the lease to another tenant, it may still end up with 20 years of losses on the difference between what it must pay to Canary Wharf Group and what it receives in rent. Successful arguments of ‘lease frustration’ are few and far between. It will be heartening for commercial landlords to see that it is still very difficult for tenants to leave them ‘holding the bag’ due to circumstances far beyond their control.

Given the huge sums of money at stake it is very likely that EMA will appeal this judgment, possibly directly to the Supreme Court, so we will continue to monitor future developments in this case.

A copy of the full judgment can be found on the link below.

Canary Wharf v EMA

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Email: bh@boodlehatfield.com

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