Ontario Court Grants Anti-suit Injunction To Enjoin Foreign Arbitration In Ongoing Crypto Litigation

Key takeaways

• The Ontario Superior Court of Justice granted an anti-suit injunction restraining Binance from pursuing arbitration in Hong Kong related to an Ontario class action.
• The Court reiterated its earlier ruling that the arbitration clause in Binance's customer terms of use was void as it was contrary to public policy and unconscionable.
• The case highlights the risks to parties that effectively seek an end-run around the findings of Ontario courts in foreign jurisdictions, including potential adverse costs awarded on a substantial indemnity basis.

In Lochan v. Binance,¹ the Ontario Superior Court of Justice granted an anti-suit injunction restraining Binance from bringing a foreign arbitration against representative plaintiffs in an Ontario class action against Binance.

The Court also awarded costs to the plaintiffs on a substantial indemnity basis, observing that Binance's foreign arbitration attempted to take an end-run around Ontario courts' certification of the class action and previous holding that the arbitration agreement at issue was void.² In awarding substantial indemnity costs, the Court noted that parties should be discouraged from employing litigation tactics that implicate the personal financial jeopardy of individual representative plaintiffs in class actions.

Background

This case arose from an Ontario class action, in which Canadians who purchased cryptocurrency derivative products through Binance's trading platform allege that Binance engaged in the business of trading in securities without registration and distributed securities without complying with applicable prospectus requirements.

Binance originally moved to stay the class action on the basis that its customer terms of use required arbitration. As previously reported, Binance's stay motion and subsequent appeal were denied. The Court of Appeal for Ontario affirmed the motion judge's finding that the arbitration clause — which set the forum for arbitration as Hong Kong — was void because it was contrary to public policy and was unconscionable.

The Court of Appeal also affirmed the certification of the Ontario class action against Binance.

The anti-suit injunction

Over a year following the Court of Appeal's decision affirming that the arbitration clause in Binance's terms of use was void, Binance, acting through an affiliate, commenced arbitration proceedings in Hong Kong against the two Ontario representative plaintiffs. In the notice of arbitration, Binance's affiliate, Nest, alleged that the representative plaintiffs breached Binance's terms of use by bringing the Ontario class proceeding and that such claims should have been referred to arbitration in Hong Kong.

The representative plaintiffs brought a motion in Ontario to enjoin Binance and its affiliate from bringing the arbitration proceeding in Hong Kong.

Binance advanced the following arguments to resist the plaintiffs' motion:

• The previous rulings of Ontario courts are not binding in Hong Kong.
• Binance did not commence the arbitration proceeding in Hong Kong; rather, it was commenced by Nest, a Seychelles corporation that is not a party to the Ontario class action and so is not bound by the previous rulings of Ontario courts in the action.
• The cause of action in the Hong Kong arbitration is not the same as the Ontario class action; while the Ontario class action is based on alleged breaches of Ontario securities law, the Hong Kong arbitration is based on a claim for breach of contract (i.e., the terms of use requiring disputes to be resolved by arbitration in Hong Kong).
• The injunction motion was premature as the plaintiffs were required to challenge the arbitration before Hong Kong arbitrators to determine whether they would take jurisdiction over the claim before seeking an injunction from an Ontario court.

The Ontario Superior Court rejected all of Binance's arguments. It found that

1. the Hong Kong arbitration was a spin-off of the Ontario class action, and any differences between the two proceedings were "all form and no substance". The Court noted that Nest, the claimant in the Hong Kong arbitration, was "nothing but the alter ego of Binance".
2. Binance's argument that the plaintiffs' motion was premature on the basis that Hong Kong arbitrators were required to first decide whether they would take jurisdiction over the matter (i.e., based on the competence-competence principle) was a replica of the argument Binance advanced — and the Court rejected— at its motion to stay the class action in favour of arbitration. The Court of Appeal previously held that the circumstances relating to deciding the validity of Binance's arbitration clause fell within an exception to the competence-competence principle. In the words of the Court: "The step that Binance says ought to have come first – determination of Hong Kong jurisdiction by a Hong Kong arbitrator – ha[d] already been determined to be a non-starter."
3. by commencing arbitration under an arbitration agreement already determined to be unconscionable and contrary to public policy, and in seeking in that forum to claw back any award by the Court to the plaintiffs, Binance's Hong Kong arbitration was an "abuse of the courts" that lies at the heart of the remedy of an anti-suit injunction.
4. the criteria for an anti-suit injunction were met in that: (i) Ontario courts had previously determined that it would be excessively costly and burdensome to compel the plaintiffs to contest the jurisdictional issue in Hong Kong; (ii) Ontario was the preferable forum to Hong Kong applying forum non conveniens principles; and (iii) it would not be unjust to deprive Binance of the advantages of Hong Kong as a forum as Ontario courts had already determined that the underlying arbitration agreement that contemplated Hong Kong as the arbitration forum was invalid.
5. while Nest was technically a non-party to the Ontario class action and the injunction motion, the Court had jurisdiction to grant an injunction against Nest, particularly because Nest was effectively acting as the "alter ego" of Binance and only sought remedies in the arbitration that were strictly for the benefit of Binance.

The Court granted the injunction enjoining Binance and its affiliates from bringing the Hong Kong arbitration.

In a subsequent decision, the Court awarded the plaintiffs costs on a substantial indemnity basis. The Court noted that as the plaintiffs had already defeated Binance's stay motion in favour of arbitration (and that ruling had been upheld on appeal), the plaintiffs "should not have had to address the point yet again in the disguised form of a 'breach of contract' claim with a 'new' party." The Court further observed that Binance's litigation "tactics" — which threatened the representative plaintiffs with personal financial jeopardy — should be discouraged.

Conclusion

This latest case in the Binance saga highlights the risks to parties of (however novelly) seeking an end-run around the findings of Ontario courts in foreign jurisdictions, particularly where the Ontario court has already taken jurisdiction over the matter. Moreover, in such circumstances, courts may be more inclined to award costs on a substantial indemnity basis, particularly where parties employ litigation strategies that implicate the personal financial jeopardy of individual representative plaintiffs in class actions.

Footnotes

1. 2025 ONSC 6493.

2. 2026 ONSC 194.

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