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Clifford Chance's property litigation team leads Canary Wharf Group to victory in high-profile Brexit commercial lease dispute

February 20, 2019

Clifford Chance's property litigation team leads Canary Wharf Group to victory in high-profile Brexit commercial lease dispute

International law firm Clifford Chance has successfully led its client Canary Wharf Group to victory in its £500 million court case against the European Medicines Agency (EMA) in the High Court in London.

Mr Justice Marcus Smith handed down judgment today (20 February 2019), comprehensively in Canary Wharf Group's favour, rejecting the EMA's case that their 25-year lease of premises in Canary Wharf would be legally "frustrated" as a result of Brexit, the judgment concluded as follows:

"The Lease will not be discharged by frustration on the United Kingdom's transition from Member State of the European Union to third country nor does the EMA's shift of headquarters from London to Amsterdam constitute a frustrating event. The EMA remains obliged to perform its obligations under the Lease".

The judgment means that Canary Wharf Group has been successful in bringing a claim for a declaration of the High Court that Brexit will not frustrate the Lease and that the EMA will remain bound to perform the Lease terms. The Judge further ruled that on EMA's case any frustration would have been self-induced, given that it is the EU Regulation passed in November 2018 which requires its relocation from London. 

The case has to date been of significant interest in the press and in particular in the legal and property market. Legal and market commentators have speculated that the EMA's argument could have had much wider implications and opened the door to many similar claims of ‘legal frustration’ resulting from the impact of Brexit.

Ben Hatton, Director of Property Litigation who led the team said: "We are pleased to secure this victory for our client Canary Wharf Group. The Judge has ruled that Brexit does not amount to an event of frustration of the EMA's lease. This will discourage other contracting parties from claiming that Brexit frustrates their contracts. To determine otherwise would have further undermined commercial certainty for contracting parties across England and Wales at a time where uncertainty is rife for businesses. This decision will therefore be welcome news for the UK economy."

The EMA, an agency of the European Union, is a tenant of Canary Wharf Group at 25-30 Churchill Place in Canary Wharf, London, under a lease year entered into in 2014. The Lease is for a term of 25 years up to 2039 with no break clause and is governed by English law under the jurisdiction of the English Courts.

Ben Hatton, Director of Property Litigation, and Associate Adam Eagle, led the Clifford Chance team, including Joanne Wicks QC and Jonathan Chew (Wilberforce Chambers) and supported on EU law aspects of the case by Lord Anderson of Ipswich KBE QC Zahra Al-Rikabi of Brick Court Chambers.

Clifford Chance's experienced real estate litigation team act on the full range of property disputes in Courts, Tribunals, Expert Determinations and Arbitrations. The team also advises clients on property litigation risk avoidance in transactions.