EMA ends legal dispute with Canary Wharf Group after WeWork sublet
The European Medicines Agency is to withdraw its appeal against a high court decision over its disagreement with Canary Wharf Group about whether Brexit frustrated its lease after confirming it has sublet its space to WeWork.
The EMA, which relocated to Amsterdam in March as a consequence of the outcome of the UK‘s referendum on its EU membership, wanted to get out of its office lease at 30 Churchill Place, E14, which began in 2014 and is due to end in 2039.
This led Canary Wharf Group to start legal proceedings in July 2018 amid concerns around the implications for its shareholders and lenders. It argued that the rental income was necessary for the developer to repay the lenders who backed the construction of the building.
The European Medicines Agency is to withdraw its appeal against a high court decision over its disagreement with Canary Wharf Group about whether Brexit frustrated its lease after confirming it has sublet its space to WeWork.
The EMA, which relocated to Amsterdam in March as a consequence of the outcome of the UK‘s referendum on its EU membership, wanted to get out of its office lease at 30 Churchill Place, E14, which began in 2014 and is due to end in 2039.
This led Canary Wharf Group to start legal proceedings in July 2018 amid concerns around the implications for its shareholders and lenders. It argued that the rental income was necessary for the developer to repay the lenders who backed the construction of the building.
The EMA countered that the UK’s decision to exit the European Union was unforeseen at the time the agreement was made, which constitutes “frustration” of its lease – a rarely used legal mechanism that, if successful, would enable it to get out of the agreement.
The outstanding bill for the remainder of the lease, including service charges and rates, was around £500m.
However, during the court process the EMA held discussions with multiple potential occupiers, including WeWork, to take on its lease.
The agreement with WeWork will see the flexible workspace provider take over the entire 284,704 sq ft vacated by the EMA up until the lease expiry date. It has begun fitting out the space and is aiming to open the new location in December.
LISTEN: On the Case: EMA Brexit dispute analysed by the QCs who fought the case
Mary Finnigan, head of transactions at WeWork EMEA, Real Estate, said: “Canary Wharf is one of the most attractive business districts in the city, with many international companies based there.
“It’s a desirable location for our member businesses who are rapidly scaling as well as the large enterprise companies who now represent 40% of our global membership.”
The EMA was advised by BNP Paribas Real Estate and DLA Piper; WeWork by Cushman and Wakefield and Addleshaw Goddard; and Canary Wharf Group by Clifford Chance.
Ben Hatton, director of property litigation who led the team at Clifford Chance representing CWG, said the move means the high court decision will stand, bringing an end to uncertainty in the market.
He said: “Since the beginning of this case we have been absolutely confident that the courts would decide that Brexit does not frustrate the EMA’s lease.
“We are very pleased to have obtained a just result for Canary Wharf Group and for the wider market in this landmark case.
“The EMA is now formally applying for its appeal to be dismissed by the Court of Appeal.
“With this conclusion, contracting parties should take comfort that the result of the high court’s judgment stands. This will bring to an end concerns in the market about the floodgates opening to many similar types of claim arising out of Brexit.”
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