What Is the Test for Interim Measures Pending Commencement of an International Commercial Arbitration?
By Karine Fahmy and Abubaker Ahmed
The Ontario Superior Court’s decision in NorthStar Earth & Space sets a new precedent for court-ordered interim measures in support of international arbitration proceedings, departing from the established Canadian RJR-MacDonald test for injunctive relief. When NorthStar sought, as an interim measure, to order Spire to operate failed satellites and deliver data pending arbitration, the Court applied a “reasonable possibility of success” merits standard—rather than the stricter “strong prima facie case” requirement which would have normally applied to mandatory injunctions. This decision may reshape the landscape for obtaining court-ordered interim measures in Canada, particularly for international arbitration practitioners.
The recent decision by the Ontario Superior Court in NorthStar Earth & Space[1] appears to depart from established precedents in its approach to granting interim measures before the commencement of an arbitration under the International Commercial Arbitration Act (“ICAA”). Below, we provide our perspective on the reasoning that led the Court to adjust the first prong of the traditional tripartite test for injunctive relief set out by the Supreme Court of Canada in RJR-MacDonald[2] (“RJR-MacDonald”) and discuss the potential implications of the NorthStar decision for arbitration practitioners and their clients.
Background of the Case
The dispute arises from a Constellation Services Framework Agreement (the “Agreement”) between NorthStar and Spire, under which Spire was contracted to manufacture, launch, and operate satellites, from which NorthStar would obtain images. After the satellites were launched, one was lost in space, and the remaining three failed to meet the required operational standards, amounting to a “Block Failure” under the Agreement. Since Spire was unable to provide replacement satellites within the eleven-month timeframe specified under the Agreement, NorthStar, which had indicated its intention to commence arbitration under the Rules of the International Chamber of Commerce (“ICC Rules”), asked the Ontario Superior Court, as an interim measure, to order Spire to maintain the failed satellites in orbit and provide images to NorthStar until replacement satellites were put into commercial operation or until the conclusion of the arbitration.
Traditional Analytical Framework for Injunctive Relief
As noted by the Court,[3] the legal test for granting injunctive relief has been well settled in Canada since the Supreme Court’s decision in RJR-MacDonald. The moving party needs to show that (a) there is a serious issue to be tried, (b) it would suffer irreparable harm should the injunction not be granted and (c) the balance of convenience favours granting the injunction. When the injunction sought is mandatory as opposed to prohibitive, the “serious issue to be tried” standard is replaced by the more stringent “strong prima facie case” standard.[4]
Adapted Framework in the Context of an Impending International Arbitration
Here, despite having determined that the injunctive relief sought by NorthStar was mandatory because it would require Spire to deliver data from the failed satellites and keep them operating,[5] the Court decided to apply the “reasonable possibility of success” standard, instead of the “strong prima facie case” standard. The Court justified this departure by stating that the urgency of the matter prohibited NorthStar from bringing its motion for interim measures before the arbitral tribunal who would otherwise have applied Article 17A(1)(b) of the Model Law, which requires that, to grant interim measures, the arbitral tribunal only needs to be satisfied that there is a “reasonable possibility” of success on the merits of the claim.[6] The Court found support for this reasoning in Article 17J of the Model Law, which provides that a court has the power to issue interim measures in relation to arbitration proceedings and shall exercise such power “in accordance with its own procedures” but “in consideration of the specific features of international arbitration.”[7] It appears that the Court’s reasoning on the applicable standard directly impacted the outcome of NorthStar’s motion, since the Court observed that NorthStar would likely not have met the more stringent “strong prima facie case” standard.[8]
The question is therefore what interpretation should be given to the last part of 17J? One reasonable possibility could be, as the Court decided, that the domestic court should apply the criteria set out in 17A governing the issuance of interim measures by an arbitral tribunal. However, in our view, this would deprive of any meaning the first part of 17J which refers to the court’s own procedures.
Perhaps most importantly, the Commentary accompanying the Model Law, to which courts are directed to have regard with a view to fostering an international consensus, shows that it was proposed during the Model Law’s drafting that there should be uniform standards and criteria used by domestic Courts in issuing interim measures but this option was ultimately rejected by the Working Group.[9] In fact, the first proposed variant on the powers of domestic courts under Article 17J was that the court should use the standards applicable under the forum’s procedural law and the second variant was that the court should exercise its power “in accordance with the requirements set out under article 17,”[10] which would have included 17A. The decision was made to adopt the first variant with the caveat that it “would have to provide flexibility for the court to adapt to the specific features of international arbitration.”[11]
Implications for Arbitration Practice
The RJR-MacDonald test has created some predictability and certainty for practitioners and applicants as to the outcome of their motions for interim measures. The Ontario Superior Court’s ruling potentially introduces a degree of unpredictability into the process of seeking court-ordered interim relief in support of arbitration under the ICAA. The Court appears to have held that the “reasonable possibility of success” of Article 17A(1)(b) of the Model Law falls somewhere between the “serious question to be tried” standard and the “strong prima facie case” standard, without defining where on that continuum it sits.[12] Because the Court’s reasoning implies that the “reasonable possibility of success” standard would apply to prohibitive and mandatory injunctions indistinctly, the NorthStar decision, if followed, would have the effect of heightening the threshold of the first branch of the RJR-MacDonald test for prohibitive injunctions while lowering it for mandatory injunctions.
In addition, while domestic and international arbitration are governed by different legal regimes in Ontario and most Canadian provinces, the Court’s ruling in NorthStar appears to depart from a line of Ontario precedents[13] that have consistently applied the RJR-MacDonald test to cases where courts are asked to issue interim measures in support of both international and domestic arbitration proceedings. The NorthStar ruling thus introduces differential access to interim measures between the domestic and international arbitration regimes which, while potentially justified given the different legal frameworks, merits continued debate and analysis.
Conclusion
The NorthStar decision marks a notable shift in the analytical framework for granting interim measures in support of arbitration under the ICAA. Practitioners will now need to watch closely for how courts further interpret and apply the NorthStar decision, particularly regarding court-ordered mandatory injunctions in international arbitration contexts.
[1] NorthStar Earth & Space Inc. v. Spire Global Subsidiary, Inc., 2024 ONSC 5060 (CanLII).
[2] RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC) at paras. 348-349.
[3] NorthStar, supra note 1 at para. 35.
[4] R v. Canadian Broadcasting Corp., 2018 SCC 5 (CanLII), [2018] 1 S.C.R. 196 at paras. 12 and 15.
[5] NorthStar, supra note 1 at para. 36.
[6] NorthStar, supra note 1 at paras. 41 and 43.
[7] NorthStar, supra note 1 at paras. 42 and 44.
[8] NorthStar, supra note 1 at para. 55.
[9] Ilias Bantekas et al, UNCITRAL Model Law on International Commercial Arbitration: A Commentary (Cambridge: Cambridge University Press, 2020) at 502.
[10] Report of the Working Group on Arbitration on the Work of its Thirty-Eighth Session, UN GAOR, 36th Sess, UN Doc A/CN.9/524 (2003) at 76-77.
[11] Ibid.
[12] NorthStar, supra note 1 at para. 44.
[13] See, for example, Bombardier Transportation Canada Inc. v Metrolinx, 2017 ONSC 2372 (CanLII) at paras. 55-59; Nowvertical Group Inc. v. Trousdell, 2024 ONSC 595 (CanLII), at paras. 31-40; International Steel Services Inc. v Dynatec Madagascar S.A., 2016 ONSC 2810 (CanLII), at paras. 32-49; Cash Cloud v. BitAccess, 2022 ONSC 5622 (CanLII), at paras. 41-46.
Karine Fahmy is a partner at Borden Ladner Gervais LLP in Montreal, she is a litigation lawyer whose practice primarily focuses on complex national and transnational litigation disputes as well as on domestic and international commercial arbitrations.
Abubaker Ahmed is an associate at Borden Ladner Gervais LLP in Ottawa. He maintains a broad civil litigation practice with a particular interest in domestic and international commercial arbitration.
