Canary Wharf case could spell danger for UK landlords
Landlords have been warned that a case between the European Medicines Agency (EMA) and Canary Wharf Group could have significant ramifications across the country.
Europe’s equivalent to the FDA signed a 25-year lease on its Canary Wharf premises in 2014. However, following the Brexit vote in 2016, the agency is set to move its 900 jobs to Amsterdam.
The agency wants to break its lease in the UK capital’s Canary Wharf area, saying that it couldn’t have anticipated that Britain would vote to leave the European Union.
If the EMA manages to successfully argue that Brexit has frustrated its contract, it could break its lease at 30 Churchill Place without owing anything to Canary Wharf Group. It would also be owed all the money it has given to the landlord throughout its tenure.
Property owner Canary Wharf T1 Ltd has now filed a lawsuit to enforce the lease, because the issue is creating uncertainty for its shareholders and lenders.
Canary Wharf T1 estimates the bill at around £500 million and says that it is important that there is a ruling before the UK is scheduled to leave the EU in March 2019.
Should the ruling go in EMA’s favour it could lead to a number of other tenants throughout the UK using the same legal argument to break off their lease contracts and relocate businesses abroad.
A spokesperson for the owners of the property said: “We feel that the EMA should continue to comply with their freely negotiated legal obligations. We have been working with the EMA for nine months to see if they can resolve the issue. However, we are seeking this declaration so that the EMA is clear that its lease obligations will not be affected by Brexit.”
Meanwhile, the EMA has argued that it had written to its landlord to say that “as the EMA is inextricably intertwined with the EU institutions and the member states that host them, Brexit would be treated as an event of frustration of the lease.”
A ruling is expected to be made in the coming weeks.