High Court judge Mr Justice Marcus Smith made a number of errors in ruling that Brexit will not frustrate the European Medicines Agency’s £13m-a-year lease of premises at Canary Wharf, according to the EMA’s grounds of appeal in the case.
The Court of Appeal is set to hear the appeal by 16 March next year, and the EMA has now submitted its written grounds to the court.
They state: “In general terms, the judge erred in holding that the consequences of Brexit would not frustrate the lease.”
They add: “The judge erred in failing to recognise that Brexit, a supervening event which was not relevantly foreseeable when the EMA agreed to take the lease, will cause a series of changes in the EMA’s legal position in the UK which are so fundamental as to render performance of the lease radically different and thus engage the modern doctrine of frustration.”
Among its arguments, the EMA says that the judge was wrong to find that it would retain “vires” – or powers – under European law to assign the lease or sublet the premises as a “commercial landlord”. It maintains that its functions create no basis to acquire, hold or dispose of property.
It says that the court should not have decided this novel point on the powers under EU law of an EU agency operating in what would be a former EU member state without making a reference to the European Court of Justice.
Canary Wharf Group is expected to argue that the High Court judge was correct to find in its favour.
See also: Canary Wharf v EMA Brexit ruling in 10 minutes
In February, the judge ruled, after a near 10-day long trial, that Brexit would not frustrate the EMA’s £13m-a-year lease at Churchill Place, E14, which runs until 2039 with no break clause.
This has left the EMA facing the prospect of having to sublet the building and act as a commercial landlord for the next 20 years.
If the ruling had gone in the EMA’s favour, it would have been able to walk away from the property after Brexit without paying further rent.
The judge said that, while the EU may not want to have the headquarters of one of its agencies in a non-EU country, there was no legal reason why it should not. He acknowledged that Brexit is “a seismic event”, but said that it didn’t change the fact that the parties had negotiated an “out clause” in the lease if the EMA decided to leave.
However, in granting the EMA permission to appeal, he said that the case has “significant ramifications, not simply in terms of the effect of the withdrawal of the United Kingdom from the European Union on contracts… but also in terms of how one approaches the question of frustration in the context of detailed and commercially sophisticated leases”.
He added: “It seems to me that even if it were not a case concerning the withdrawal of the United Kingdom from the European Union, this would nevertheless be a case of wide-ranging importance. I also consider that an appeal would have a real prospect of success.”
See also: EMA Brexit dispute analysed by the QCs who fought the case
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