No Frustration by Brexit

CANARY WHARF (BP4) T1 LIMITED AND OTHERS – V – EUROPEAN MEDICINES AGENCY [2019] EWHC 335(CH)

I suppose it must have been worth a roll of the dice on the part of the European Medicines Agency (“EMA”) to argue that the lease of its Canary Wharf premises was frustrated by Brexit.  That they lost, however, should come as little surprise to devotees of English Contract Law.

Mr Justice Marcus Smith in his judgement presents us with an erudite exposition on the English Law of Frustration and carefully examines the arguments produced by the EMA including its late argument which just seems to have appeared only in its opening submissions relating to the performance of the lease in question being ultra vires and requiring domestic law to provide a remedy.

The EMA tried a miscellany of arguments including arguing that continuing the lease is ultra vires and that it would have to pay double rent i.e. rent in London and rent somewhere in the EU.

The fact is, however, that the English Law of Frustration has always been narrowly applied in the light of the applicable factual matrix.   Mr Justice Marcus Smith’s judgement in this case is no different and follows the traditional line.

Doubtless the EMA will appeal but I think it fair to guess that a moderately conservative Court of Appeal panel are likely to come up with much the same conclusion.

The premises can still be occupied, they can still be used and the EMA could seek a dispensation from the EU to permit them to stay in London until such time as they found an assignee.

As far as frustration is concerned the test you have to apply is that which has been commonly put forward by the courts for the last however many years.   If you can still do “it” without the common purpose of the contract being destroyed, then you can’t claim frustration.

So in Canary Wharf the EMA just can’t pull out but a lot of people who might be impinged by Brexit will be looking on at this case and seeing how the intervening acts of Brexit may not be a get out of jail card.

 

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Jury O'Shea