The Times has reported that the European Medicines Agency (EMA) is seeking to terminate its £500million lease of offices at Canary Wharf. The EMA is responsible for the evaluation and supervision of medicines for humans and animals and is relocating to Amsterdam after Brexit.
The EMA is apparently arguing that ‘under EU law it must be located in a member state’ to be eligible for the ‘immunities and privileges’ granted to the EU’s decentralised agencies. They also argue that the decision to exit the EU was an ‘unforeseen event’.
The EMA’s landlord is now disputing this arguing that the UK’s EU membership has been ‘a divisive topic for many years’ and that Article 50, which permits states to withdraw from the union, ‘has been enshrined in law since 2007’.
It is interesting to see how the United Kingdom’s withdrawal from the European Union has led to this dispute and provides an example of the difficulty in applying terms in a lease that was negotiated before Article 50 was triggered.
Whether a lease, or some other kind of contractual arrangement, most documents are drafted to provide a degree of flexibility. The challenge for anyone entering a contract is in allowing for flexibility to suit changes in circumstances, making sure that the contract will be workable and carefully defining when the right to renegotiate or terminate will arise and what remedies will result from that.
The case will have important implications, not only for the parties involved and the other tenants in the building, but for all businesses, whether directly involved with the EU or which conduct a large part of their operations in Europe or with companies that do.
It is a reminder to review all types of contract to try and foresee issues that might arise as a result of Brexit and to ensure new contracts are carefully drafted to account for unforeseen events.
Farleys’ commercial team have experience of drafting and advising on a wide range of commercial contracts, including commercial leases. If you are looking for advice on breaking your commercial lease or are entering into a new lease and would like advice from our commercial solicitors please call 0845 287 0939 or email us through our online contact form.