IRCP v Lufthansa: Challenge to Arbitral Tribunal's Jurisdiction over Supplemental Agreement

International Research Corp PLC (IRCP) challenged the jurisdiction of an arbitral tribunal in Singapore regarding a payment dispute with Lufthansa Systems Asia Pacific Pte Ltd (Lufthansa) and Datamat Public Company Ltd (Datamat). The dispute arose from a Cooperation Agreement between Lufthansa and Datamat, and subsequent Supplemental Agreements involving IRCP. IRCP argued it was not bound by the arbitration clause in the Cooperation Agreement. The High Court of Singapore dismissed IRCP's application, finding that the parties intended the Dispute Resolution Mechanism to bind all three parties.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

IRCP challenges an arbitral tribunal's jurisdiction, arguing that an arbitration clause in a contract does not bind a third party to a supplemental agreement. The court dismissed IRCP's application.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
International Research Corp PLCApplicantCorporationApplication dismissedLost
Lufthansa Systems Asia Pacific Pte LtdRespondentCorporationApplication dismissedWon
Datamat Public Company LtdRespondentCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Chan Seng OnnJudgeYes

4. Counsels

Counsel NameOrganization
Jasmin YekColin Ng & Partners LLP
Subramanian PillaiColin Ng & Partners LLP
Dhillon Dinesh SinghAllen & Gledhill LLP
Tan XeauweiAllen & Gledhill LLP
Teh Shi YingAllen & Gledhill LLP
Joel LimAllen & Gledhill LLP

4. Facts

  1. Lufthansa and Datamat entered into a Cooperation Agreement for the supply of a Maintenance, Repair and Overhaul System.
  2. Datamat entered into a Sale and Purchase Agreement with IRCP, where IRCP would pay Lufthansa for goods and services.
  3. Datamat faced financial difficulties, leading Lufthansa to request a third party to guarantee payments.
  4. Lufthansa, Datamat, and IRCP entered into Supplemental Agreements No. 1 and 2, modifying payment obligations.
  5. Lufthansa terminated the Cooperation Agreement and Supplemental Agreements due to a payment dispute.
  6. Lufthansa filed a Notice of Arbitration with the Singapore International Arbitration Centre.
  7. IRCP objected to the arbitration, arguing it was not a party to the arbitration agreement.

5. Formal Citations

  1. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another, Originating Summons No 636 of 2012, [2012] SGHC 226

6. Timeline

DateEvent
Datamat and Thai Airways entered into the EDP System Agreement.
Lufthansa and Datamat entered into the Cooperation Agreement.
Datamat entered into the S&P Agreement with IRCP.
Effective date of Supplemental Agreement No. 1.
Lufthansa, Datamat, and IRCP entered into Supplemental Agreement No. 1.
Meetings held to address the Payment Dispute.
Supplemental Agreement No. 2 was entered into.
Meetings held to address the Payment Dispute.
Lufthansa sent letters to IRCP demanding payment of outstanding sums.
Lufthansa sent letters to IRCP demanding payment of outstanding sums.
IRCP sent a letter to Lufthansa refusing payment.
Meetings held to address the Payment Dispute.
Lufthansa informed Datamat and IRCP that it was terminating the Cooperation Agreement and Supplemental Agreements.
Lufthansa filed its Notice of Arbitration with the Singapore International Arbitration Centre.
IRCP objected to being joined to the arbitration.
The Tribunal dismissed IRCP’s objections on jurisdiction.
IRCP commenced the present proceedings Originating Summons Number 636 of 2012.
Judgment reserved.

7. Legal Issues

  1. Jurisdiction of Arbitral Tribunal
    • Outcome: The court held that the arbitral tribunal had jurisdiction to resolve the dispute.
    • Category: Jurisdictional
    • Sub-Issues:
      • Incorporation of arbitration clause into supplemental agreements
      • Compliance with preconditions to arbitration
    • Related Cases:
      • [1996] 2 SLR(R) 196
      • [2007] 1 Lloyd’s Rep 280
      • [2010] EWHC 29 (Comm)
  2. Interpretation of Contractual Clauses
    • Outcome: The court interpreted the clauses in the Cooperation Agreement and Supplemental Agreements to determine the parties' intentions.
    • Category: Substantive
    • Sub-Issues:
      • Intention of parties
      • Contextual interpretation
    • Related Cases:
      • [2008] 3 SLR(R) 1029
      • [1998] 1 WLR 896
  3. Conditions Precedent to Arbitration
    • Outcome: The court found that the mediation procedure had been complied with, satisfying the conditions precedent to arbitration.
    • Category: Procedural
    • Sub-Issues:
      • Enforceability of mediation clause
      • Compliance with mediation procedure
    • Related Cases:
      • [2012] SGCA 48
      • [2009] 1 SLR(R) 23

8. Remedies Sought

  1. Declaration that the Tribunal does not have jurisdiction
  2. Order that the Tribunal’s ruling on jurisdiction be set aside

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Information Technology
  • Aviation

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Star-Trans Far East Pte Ltd v Norske-Tech Ltd and othersCourt of AppealYes[1996] 2 SLR(R) 196SingaporeCited for the rule that clear and express reference to the arbitration agreement is required for its incorporation in a “two-contract case”.
Sea Trade Maritime Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd (The “Athena”) (No 2)UnknownYes[2007] 1 Lloyd’s Rep 280UnknownCited for the rule that clear and express reference to the arbitration agreement is required for its incorporation in a “two-contract case”.
Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SALUnknownYes[2010] EWHC 29 (Comm)England and WalesCited for the rule that clear and express reference to the arbitration agreement is required for its incorporation in a “two-contract case”.
Aughton Ltd v MF Kent Services LtdUnknownYes(1991) 57 BLR 1UnknownCited for the policy behind requiring clear and express words of incorporation for an arbitration agreement.
Thornton v Shoe Lane Parking LtdUnknownYes[1971] 2 QB 163England and WalesCited for the phrase used by Lord Denning in relation to bringing something to the attention of the other contracting party.
L&M Concrete Specialists Pte Ltd v United Eng Contractors Pte LtdUnknownYes[2000] 2 SLR(R) 852SingaporeCited for the rule that for an arbitration agreement in one contract to be incorporated into another, it must be brought to the attention of the other contracting party with a “red hand pointing to it”.
Emmott v Michael Wilson (No. 2)UnknownYes[2009] EWHC 1 (Comm)England and WalesCited by Lufthansa, but distinguished by the court because the party resisting arbitration was a party to the agreement containing the arbitration clause.
Fiona Trust v PrivalovUnknownYes[2008] 1 Lloyd’s Rep 254UnknownCited for the presumption that rational businessmen are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal.
Tjong Very Sumito and others v Antig Investments Pte LtdCourt of AppealYes[2009] 4 SLR(R) 732SingaporeCited by Lufthansa, but distinguished by the court because the court was not concerned with a situation where a non-party to the SPA became a party to the four supplemental agreements.
Faghirzadeh v Rudolf Wolff (SffA) (Pty) LtdUnknownYes[1977] 1 Lloyd’s Rep 630UnknownCited by IRCP to support the argument that in authorities which considered several agreements as one composite agreement, the parties to the various agreements were the same throughout.
Fletamentos Maritimos SA v Effjohn International BVUnknownYes[1996] 2 Lloyd’s Rep 304UnknownCited by IRCP to support the argument that in authorities which considered several agreements as one composite agreement, the parties to the various agreements were the same throughout.
Coop International Pte Ltd v Ebel SAUnknownYes[1998] 1 SLR(R) 615SingaporeCited by IRCP to support IRCP’s position, but the facts were very different.
Astrata (Singapore) Pte Ltd v Portcullis Escrow Pte Ltd and another and other mattersCourt of AppealYes[2011] 3 SLR 386SingaporeCited for the interpretation of a subsequent agreement entered into by two parties to a prior agreement, and a new third party.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the modern contextual approach to interpretation.
Investors Compensation Scheme Ltd v West Bromwich Building SocietyUnknownYes[1998] 1 WLR 896England and WalesCited for the principles of contractual interpretation.
Re Sigma Finance Corporation (in administrative receivership)UnknownYes[2008] EWCA Civ 1303England and WalesCited for the language in the agreement is an important starting point.
Re Sigma Finance Corporation (in administrative receivership)Supreme CourtYes[2009] UKSC 2United KingdomCited for the language in the agreement is an important starting point.
Yamashita Tetsuo v See Hup Seng LtdUnknownYes[2009] 2 SLR(R) 265SingaporeCited for the courts must have regard to the commercial purpose of the contract in the construction of contractual terms.
Mannai Investment Co Ltd v Eagle Star Life Assurance Co LtdHouse of LordsYes[1997] AC 749United KingdomCited for the law generally favours a commercially sensible construction.
Econ Piling Pte Ltd v NCC International ABHigh CourtYes[2007] SGHC 17SingaporeCited for a contextual interpretation of the Supplemental Agreements entails a finding that the parties must have intended for a common dispute resolution mechanism to govern all their disputes arising out of the Cooperation Agreement read with the Supplemental Agreements.
Mancon (BVI) Investment Holding v Heng Holdings SEAUnknownYes[2000] 3 SLR 220SingaporeCited for if two contractual documents had to be read together, it would be totally illogical to have the arbitration clause apply to one but not the other unless that was explicitly agreed upon.
Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2)Court of AppealYes[2007] 1 QB 886England and WalesCited for the ascertainment of the parties’ objective intentions.
Master Marine AS v Labroy Offhsore Ltd and othersUnknownYes[2012] 3 SLR 125SingaporeCited for the contextual approach to interpretation is not a carte blanche for “creative interpretation”.
Chartbrook Ltd and another v Persimmon Homes Ltd and anotherUnknownYes[2009] 3 WLR 267England and WalesCited for what is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed.
The Federal BulkerUnknownYes[1989] 1 Lloyd’s Rep 103UnknownCited for the English law of contract has taken a benevolent view of the use of general words to incorporate by reference standard terms to be found elsewhere.
Concordia Agritrading Pte Ltd v Cornelder Hoogewerff (Singapore) Pte LtdUnknownYes[1999] 3 SLR(R) 618SingaporeCited for if specific words are used, it simply means that the parties’ intentions are unambiguously expressed.
Africa Express Line Ltd v Socofi SA and anotherUnknownYes[2010] 2 Lloyd’s Rep 181UnknownCited for the ultimate issue is what objectively did the parties intend.
Thomas (T W & Co) Ltd v Portsea Steamship Co LtdUnknownYes[1912] AC 1UnknownCited for the strict rule in relation to express words are required to incorporate an arbitration agreement into another.
AIG Europe SA v QBE International Insurance LtdUnknownYes[2001] 2 Lloyd’s Rep 268UnknownCited for the court must construe the language of the contract using the modern contextual approach to interpretation and ask itself whether a consensus on the applicability of the arbitration agreement is clearly and precisely demonstrated.
Walford v MilesHouse of LordsYes[1992] 2 AC 128United KingdomCited for an agreement to negotiate in good faith was unworkable in practice because while negotiations were in existence, either party was entitled to withdraw from those negotiations at any time and for any reason.
HSBC Institutional Trust Services (Singapore) Ltd v Toshin Development Singapore Pte LtdCourt of AppealYes[2012] SGCA 48SingaporeCited for when, as part of a wider existing contractual framework, there is a clause obliging the parties to negotiate certain contractual modalities in good faith, such negotiations need not necessarily be adversarial and hostile, but call instead for a consensual approach to resolve the identified matters as part of the performance of the broader existing agreement.
Insigma Technology Co Ltd v Alstom Technology LtdUnknownYes[2009] 1 SLR(R) 23SingaporeCited for the clause was unenforceable because it was vague and subjective, “especially in relation to the meaning of the words ‘friendly’ and ‘consultations’.
Cable & Wireless Plc v IBM United Kingdom LtdUnknownYes[2002] CLC 1319United KingdomCited for contractual references to ADR which did not include provision for an identifiable procedure would not necessarily fail to be enforceable by reason of uncertainty.
Insigma Technology Co Ltd v Alstom Technology LtdCourt of AppealYes[2009] 3 SLR(R) 936SingaporeCited for a dispute resolution clause, which may be multi-tiered in nature, should be construed like any other commercial agreement.
Smith v MartinUnknownYes[1925] 1 KB 745UnknownCited for an arbitral tribunal would not have jurisdiction before the condition precedent is fulfilled.
HIM Portland LLC v Devito Builders IncUnited States Court of AppealsYes317 F 3d 41United StatesCited for the provisions of the contract had stated in the plainest possible language that mediation was a condition precedent to arbitration, and concluded that “there is no doubt that the parties intended that the duty to arbitrate would not ripen until after the condition precedent of mediation had been satisfied”.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SACourt of AppealYes[2007] 1 SLR(R) 597SingaporeCited for an arbitral tribunal’s ruling on jurisdiction—positive or negative—is not a decision on the substance of the dispute, and cannot be characterised as an award.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration agreement
  • Supplemental agreement
  • Cooperation agreement
  • Jurisdiction
  • Condition precedent
  • Mediation
  • Dispute resolution mechanism
  • Incorporation
  • Objective intention
  • Payment dispute

15.2 Keywords

  • arbitration
  • jurisdiction
  • contract
  • supplemental agreement
  • Singapore
  • IRCP
  • Lufthansa
  • Datamat

17. Areas of Law

Area NameRelevance Score
Arbitration90
International Arbitration90
International Commercial Arbitration90
International Arbitration Act90
Contract Law70
Breach of Contract50
Jurisdiction40
International Commercial Law30

16. Subjects

  • Arbitration
  • Contract Law
  • Jurisdiction