Yesterday (20 February) saw the publication of the High Court's judgement in a claim between the Canary Wharf Group and the European Medicines' Agency (EMA) where the EMA argued that once the UK ceases to be a member state of the European Union their lease of premises would be void by frustration. 

The conclusions reached in the judgement came as no surprise to observers: Brexit is not sufficiently "frustrating" in the legal sense to render a lease void; and the EMA, regardless of its status as an agency of the European Union, can lawfully pay the rents under the lease which are in excess of £15,000,000 per year. 

The leading case on frustration quotes Virgil's Aeneid and calls on the travails of Aeneas when being told by the gods to leave Carthage (and the love of his life Dido) to press on to Italy.  Whilst Aeneas' reasoning of "Non haec in foedera veni'  ("It was not this that I promised to do") didn't carry much weight with the jilted Dido, readers of the Aeneid appreciate that this was a case of divine intervention that neither party could anticipate or ignore.

The EMA's argument (in a counter-claim) that once Brexit happens, this will be akin to a divine instruction to abandon the lease and that neither they nor Canary Wharf could ignore this, was roundly rejected by the High Court.   

Whilst the headlines will focus on the Brexit angle, the judgement draws out other issues relevant to the London office market.  

The prevailing trend for more flexible lease arrangements is seen with the EMA stressing that a 25-year lease (an institutional norm for much of the 20th Century) was a long period of time.  The judge took this point as "trite" and saw 25 years as something which "undoubtedly qualifies the Lease as a long-lease."  This point failed due to the £40m of inducements received by the EMA and that the EMA had the ability to divest themselves of the lease obligations by assignment or underletting. 

Similarly, caution in the market is born out by the evidence supplied by BNP Paribas (for the EMA) that in spite of over 12 months marketing the lease with a supportive landlord, the EMA's efforts to find a willing assignee for the remaining 20-year term have been fruitless.