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European Medicines Agency to appeal Brexit lease case

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By Reuters
European Medicines Agency to appeal Brexit lease case
FILE PHOTO: The headquarters of the European Medicines Agency (EMA), is seen in London, Britain, April 25, 2017. REUTERS/Hannah McKay/File Photo   -   Copyright  Hannah Mckay(Reuters)

By Kirstin Ridley

LONDON (Reuters) – The European Medicines Agency (EMA), one of the EU’s biggest regulators, is appealing against a London ruling that has blocked its plans to break a 25-year, £500 million lease of its London headquarters because of Brexit.

In a case that pitches the agency against the Canary Wharf Group, the landlord of London’s financial district, the EMA alleges in court filings that a High Court judge erred when he ruled in February that Britain’s plans to leave the EU did not legally prevent the agency from using the office.

Landlords fear that the case risks opening the floodgates to companies seeking to abandon multi-million-pound property contracts because of Brexit if the EMA is successful. The appeal has been scheduled for March 2020.

The case will involve a rarely-applied legal doctrine of frustration, which hinges on being able to prove that unforeseen events have radically changed the nature of an original agreement and effectively terminate it.

In its appeal, the EMA argues that it is a decentralised EU agency, has no power to operate as a “bare commercial landlord in a third country” and cannot benefit from the lease because of unforeseeable events over which it had no control.

“If a supervening event means a legal person no longer has power to perform, or benefit from, a contract then on any ordinary approach that contract has been frustrated,” the EMA said in documents dated April 15, which were seen by Reuters on Thursday.

“To hold that the EMA’s lack of power to enjoy any continued benefits under the lease was the EMA’s own doing was wrong in law and fact.”

Under the terms of the lease, which runs up to 2039 with no break clause, the EMA is liable to pay rent and meet other obligations if it cannot sub-let the office.

Lawyers at Clifford Chance, who are representing Canary Wharf Group, were not immediately available for comment.

The EMA had been based in London since it was established in 1995, but after a decision by European Union member states it relocated to the Netherlands so that it can remain in the EU after Brexit.

(Reporting by Kirstin Ridley; Editing by Elaine Hardcastle)