The European Medicines Agency (EMA) hopes to avoid the €465 million ($545 million) charge they could incur for the early termination of the contract on their London office. The EMA is tied into the lease of their London office until 2039, however the EMA believes that the opportunity to sublet and the United Kingdom’s (UK) openness to helping with withdrawal costs could spare them from the burden of the early-termination bill.
The EMA stated that although the lease does not have an early-termination cause, it does allow subletting to third parties. Therefore, the EMA plans to “explore different exit scenarios and subleasing arrangements” before they leave the offices in March.
There is still uncertainty about what, if any, termination fee EMA will incur in these scenarios, thus the EMA opted against creating an onerous lease provision. The EMA also referred to comments made by the UK in its causes against requiring the need for a provision. For example, in December 2017, the UK offered “to discuss with Union Agencies located in London how they might facilitate their relocation, in particular as regards reducing the withdrawal costs.”
The EMA believes that they cannot be held accountable for the early termination of the lease, as the Brexit vote that is forcing them to move was outside their control. In the EMA’s annual accounts, they stated that the “early termination of the lease is the consequence of events for which the agency is not responsible, which were unforeseen at the time the lease was signed. As a result, the agency as such can ultimately not be financially impacted by such events”.
Overall, the EMA has doubts concerning their liability to pay a fee, and even if they are liable the EMA thinks they currently lack the information required to make an accurate estimate of the charge. Therefore, the EMA has held off creating a provision in its annual accounts for the 2017 financial year.
Brexit has meant the EMA has been forced to make other provisions. For example, the EMA’s accounts for 2017 include provisions of €18.6 million for the relocation of staff; greater than 80% of the provision relates to long-term staff relocation costs. The estimated cost is based on the outcome of a staff survey which showed that 80% of the EMA’s staff were willing to relocate to the EMA’s new home in Amsterdam, Netherlands.
To read more on the EMA annual accounts for the 2017 financial year, please click here.