On 20 February 2019, the English High Court delivered its eagerly awaited judgment in Canary Wharf v EMA  EWHC 334 (Ch), rejecting the EMA’s argument that the United Kingdom’s withdrawal from the European Union would amount to a frustrating event allowing it to terminate its lease of premises in London.
What is frustration
Under English law, frustration allows a contract to be set aside on the basis of an unforeseen event which renders the contractual rights and/or obligations radically different to those contemplated by the parties at the time the contract was entered into. A successful claim for frustration allows the claimant to terminate the contract immediately and discharges its future liabilities.
The dispute between Canary Wharf and EMA centred around EMA’s £500 million, 25-year lease of commercial premises in Canary Wharf. The lease restricted assignment of the property to a new tenant, and also included onerous subletting provisions.
The EMA argued that its lease would be frustrated by Brexit because remaining in the Canary Wharf premises following the UK’s withdrawal from the European Union would be illegal under Regulation (EU) 2018/1718 (the 2018 Regulation), which required it relocate its headquarters to Amsterdam. Once it had relocated, the EMA would be left paying rent for a property which the 2018 Regulation prohibited it from using, and which it could not assign or sublet under the terms of the lease.