Court of Appeal for Ontario Weighs in on Forum Selection and Arbitration Clauses in Cryptocurrency Class Actions

Background: Canadian Law on Digital Assets Remains Unsettled

Investors often consider cryptocurrency and digital assets to be global assets and are not cognizant of the jurisdictional and legal issues that can apply in the event of a dispute. For Canadians investing in such assets, the applicable legal jurisdiction should not just be considered to be a peripheral issue.

Canada is home to a large and growing community of retail and institutional investors, and its courts and regulatory bodies are increasingly being asked to address disputes involving global crypto platforms. Yet, unlike in the United States – where the Congress recently passed the Genius Act to create a clearer regulatory framework – Canadian law remains somewhat unsettled.¹

Against this backdrop of uncertainty, Canadian courts are increasingly being asked to adjudicate disputes between investors and global crypto platforms. Two recent decisions of the Court of Appeal for Ontario (“ONCA”) – Shirodkar v. Coinbase Global, Inc. and Lochan v. Binance Holdings Ltd. – offer important insights into how Canadian courts approach contractual dispute resolution clauses in the crypto context.² For investors, these rulings matter not only because they influence the prospects of recovery, but also because they highlight the unique risks of operating in a jurisdiction, like Canada, where the applicable legal regime remains a work in progress.

The Decisions

Shirodkar v. Coinbase Global, Inc. (2025 ONCA 298)

In Shirodkar, investors brought a proposed class action alleging that Coinbase had operated in Ontario without the required securities registration.³ Coinbase moved to stay the proceeding on jurisdictional grounds arguing that the choice of forum clause in Coinbase’s user agreement made Ireland the appropriate jurisdiction.⁴

Notably, the appellant executed multiple user agreements with different Coinbase entities, including Coinbase Europe, Coinbase Ireland, and Coinbase Canada. The Coinbase Ireland and Coinbase Europe User Agreement identify Ireland as the non-exclusive forum to resolve disputes, while a separate Coinbase Europe User Agreement stipulates that disputes should be submitted to the courts of England and Wales. Meanwhile, the Coinbase Canada User Agreement (the “Canadian User Agreement”) indicates that Ontario, Canada is the non-exclusive jurisdiction for dispute resolution.

The appellant contended that, by agreeing to the Canadian User Agreement, all Coinbase entities had implicitly attorned to Ontario jurisdiction. The appellant primarily argued that the “us” referred to in the agreement encapsulated all Coinbase entities.

The ONCA rejected the appellant’s position, emphasizing that the agreement expressly defined “us” to mean only Coinbase Canada and the user, without reference to the broader Coinbase related companies. As such, the clause “did not retroactively confer on Ontario courts jurisdiction over the appellant’s claims against third parties, namely the non-Canadian respondents.”⁵

Moreover, the ONCA affirmed the lower court’s decision to decline assuming jurisdiction over the foreign Coinbase entities under the “real and substantial connection” framework.⁶ While the appellant contended that the non-Canadian respondents established real and substantial connections to Ontario by carrying on business in Ontario and committed a statutory tort in Ontario, the ONCA affirmed that the essential elements of businesses of non-Canadian respondents occurred outside of Ontario.⁷ The only Ontario connection was that the appellant accessed the platform from Ontario, which was insufficient in and of itself.⁸

The ONCA further dismissed the claim that the foreign entities were so closely interconnected with Coinbase Canada that they should be treated as one.⁹ Unlike cases involving conspiracy or fraud directed by a single controlling mind, the evidence showed that each Coinbase entity had distinct functions, requiring a separate jurisdictional analysis.¹⁰ Additionally, the ONCA affirmed the lower court’s decision to stay the proceedings against Coinbase Canada on the ground of forum non conveniens.¹¹ Although Ontario courts had jurisdiction over Coinbase Canada, the ONCA concluded that the company played no role in the transactions underlying the dispute, which were carried out entirely through Coinbase Europe.¹² Allowing the claim to continue in Ontario solely against Coinbase Canada risked duplicative litigation and inconsistent results.¹³ Consequently, the ONCA concluded that Ireland, the contractually selected forum, was both legitimate and procedurally capable of resolving the dispute.¹⁴

Lochan v. Binance Holdings Ltd. (2024 ONCA 784)

In Lochan, Canadian investors alleged that Binance had offered crypto derivative products without registration or a prospectus in violation of s. 133 of the Ontario Securities Act.¹⁵ In response, Binance moved to stay the proceeding in favor of arbitration by relying on the arbitration clause in its user contract in accordance with s. 9 of the International Commercial Arbitration Act, which required disputes to be resolved in Hong Kong.¹⁶

The ONCA affirmed the lower court’s decision to decline enforcing the arbitration clause on the basis that the arbitration clause was unconscionable and contrary to public policy.¹⁷ In arriving at this ruling, the court first entertained the competence-competence principle.¹⁸

The competence-competence principle stands for the proposition that, as a general rule, questions concerning an arbitral tribunal’s jurisdiction should first be resolved by the tribunal itself.¹⁹ A domestic court may only depart from that default rule where an established exception applies, permitting it to decide directly whether an arbitration clause is unenforceable.²⁰

Applying the competence-competence principle, the ONCA affirmed that the lower court was correct to find that this was one of the limited exceptions to said principle.²¹ Pursuant to the exceptions articulated in Dell Computer Corp. v. Union des consommateurs and Uber Technologies Inc. v. Heller, the court found that the arbitration clause at issue were contained in a standard form agreement, raising a pure question of law.²² To the extent that some review of the factual record was required, it was not dependent on facts unique to the representative plaintiffs but could be assessed purely on the documentary record.²³ A superficial review of the documentary record showed that the arbitration forum was effectively inaccessible due to prohibitive costs, geographical distance, and the governing law.²⁴ As a result, there was a real risk that a challenge to the arbitration clause’s validity would never be adjudicated if left to the arbitral tribunal.²⁵

Consequently, the ONCA affirmed the lower court’s finding that the arbitration clause was one-sided, unilaterally amendable by Binance, and imposed prohibitive costs and logistical burdens on ordinary investors.²⁶ Therefore, enforcing the clause would effectively deny retail investors meaningful access to justice and undermine Ontario’s consumer protection and securities law regimes.

Analysis: Why the ONCA Reached Different Results

Although superficially the issues appear to be similar in both cases, in fact, the cases deal with very different issues which explains the divergent outcomes.

In Shirodkar, the forum selection clause was treated as a legitimate redirection of claims rather than a denial of rights. The court focused on the established principles of jurisdiction simpliciter and forum non conveniens. It emphasized that not all entities in a global corporate group are subject to Ontario jurisdiction simply because their platform is accessible in the province.

A forum selection clause cannot be applied against a non-signatory entity to the agreement. As well, Ontario courts cannot assume jurisdiction over entities that fail to establish real and substantial connections with Ontario. Since Ireland has a capable and independent judicial system, and investors retain meaningful recourse there, the clause does not raise concerns about fairness or public policy.

In contrast, Lochan turned on whether the arbitration clause left investors with any realistic avenue for justice. The ONCA noted that the clause was imposed in a standard-form contract of adhesion, could be unilaterally amended by Binance, and required costly arbitration in a distant jurisdiction. The practical effect was to render investor claims illusory. Applying doctrines of unconscionability and public policy, the Court held that the clause could not stand.²⁷ In this case, the issue was not about shifting jurisdiction to another competent forum, but about denying investors access to any meaningful remedy.

The cases highlight the differences between a forum selection clause and an arbitration clause and illustrate the distinction between clauses that preserve genuine access to a legitimate forum and those that functionally extinguish investor remedies. The rulings reflect the court’s balancing of party autonomy and commercial certainty on the one hand, and the protection of investor rights and access to justice on the other. They also demonstrate that even when dealing with nascent asset categories, the issues can, and often will, turn on how established legal principles are applied to the facts.

Conclusion

The contrasting results in Shirodkar and Lochan demonstrate that while Canadian courts respect commercial certainty, they are unlikely to enforce contractual provisions that functionally deprive investors of access to justice. Until Canadian lawmakers and regulators provide clearer guidance on digital assets, the enforceability of dispute resolution clauses will remain a critical front in Canadian cryptocurrency litigation.