Can Brexit Disappoint a Lease?

Commercial Property:

Although Brexit can be frustrating for many, whether they are disappointed with the lease or not, the High Court has recently reviewed it. The European Medicine Agency (EMA) is the European Union (EU) agency responsible for the scientific testing, monitoring and monitoring of medicines in the EU. In 2014, it obtained a 25-year lease at Canary Wharf to use as its headquarters.

The reason for the EMA’s willingness to terminate their lease is that it would be “unreasonable” for a European Union agency based in a non-EU member state to move it again. Need Clearly, the EMA did not want to pay rent for its new office, as well as the London office, which it felt it could no longer use.

If the EMA can prove that Brexit is a disappointing event, the lease will expire and in doing so will release the EMA from the obligation to pay rent for the remaining 20 years. The landlord has not agreed that Brexit is a (legally) disappointing event and has sought a declaration from the courts to save significant rental income.

So what’s the disappointment?

The legal notion of frustration is that where the law recognizes that sometimes matters are not attributed to either party, it prevents them from executing an agreement or that the contract is substantially different. For example, when World War II contracted to ship goods manufactured in Leeds to Poland, it became frustrated because the sale of goods to Poland became illegal after the deal was signed. Likewise, when the coronation of King Edward VIII was delayed because he was ill, the purchase of tickets to see the coronation day was disappointing as there was no coronation. An instant of frustration. The contract is terminated later without the responsibility of either party.

EMA’s arguments:

The EMA held that it would be illegal for them to pay their obligations under the lease after the Brexit, or that it had a joint purpose of providing European headquarters to the EMA.

Illegal:

The court found that English law does not prevent EMA from paying its obligations under the lease. It also said it believed that if European law made it illegal for EMA to use the property or pay its lease obligations, which was a problem for EU law, and “frustrated with English law Was not the case. “

In this particular instance, the court held that since the EMA is a European Union agency, even if it was wrong and it should also take into account the EU’s illegality, these issues were not accepted by the European Union. The union itself will suffer. Conditions for dealing with the effects of Brexit. Since the frustration cannot be used where the super party incident happened due to one of the parties which the court should also keep in mind.

Common purpose:

The court disagreed that the lease had a common purpose. The EMA wanted to use the space on the most flexible terms it could find, and for the lowest rent, while the landlord wanted exactly the opposite: maximum long-term rent. On the basis that there was no common purpose, it cannot serve as a basis for frustration.

The judge stated that “… the fact that the barrier has shown that the EMA has paid too much for the costs it receives, in that it has failed to create the lease it would have known. That would have been the case. Business interests. “However, frustration cannot be used to get out of a bad deal.

Summary:

Although landlords have good news that they are concerned about renters wanting to use Brexit to get out of property contracts or leases, the EMA recently received a leave to appeal the decision. Is gone Property lawyers and landlords will monitor to see what the Court of Appeal has to say if the EMA appeal is processed.

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