Will Brexit frustrate a commercial property lease?

The High Court has recently announced their decision in a pinnacle case regarding whether Brexit could frustrate a commercial property lease.  Alexandra Savage, Commercial Property Solicitor in our Portsmouth office, reviews the outcome of the case.

Landlords will be relieved to hear that the High Court has decided that ‘Brexit’ alone will not frustrate a commercial property lease.  Following the decision to leave the EU in 2016, the European Medicines Agency (EMA) wrote to their landlord, Canary Wharf T1 Ltd, in August 2017 saying that "if and when Brexit occurs, we will be treating that event as a frustration of the lease”; in other words, bringing the lease to an end and releasing the parties from their obligations. The landlord understandably fought this assertion and commenced proceedings against EMA to confirm that the lease would not be frustrated by Brexit.

Mr Justice Smith of the High Court agreed with Canary Wharf T1 Ltd, ultimately stating that the UK’s departure will not have the effect of frustrating a commercial lease.  He went on to confirm that the UK's transition from member state to third country did not constitute a frustrating event.

Following the judgement, the EMA remain obligated to perform its responsibilities under the lease for the rest of the term.  While this confirms the position for UK-based landlords with European tenants, the consequences of the UK’s withdrawal from the EU on commercial contracts is still uncertain and, at the time of writing this article, will remain so until the necessary voting has occurred.  If you are a commercial property landlord or tenant and you are looking for advice on your lease, you can contact Alexandra or a member of the Commercial Property team in Portsmouth on 023 9277 6561 or email alexandrasavage@warnergoodman.co.uk. 

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.