International Research Corp PLC v Lufthansa Systems: Arbitration Jurisdiction Dispute

The Singapore Court of Appeal heard an appeal by International Research Corp PLC ("the Appellant") against the decision of the High Court, which had upheld the jurisdiction of an arbitral tribunal in a dispute between the Appellant and Lufthansa Systems Asia Pacific Pte Ltd ("the Respondent"). The dispute arose from a Cooperation Agreement between the Respondent and Datamat Public Company Ltd, and subsequent Supplemental Agreements involving the Appellant. The Court of Appeal allowed the appeal, ruling that the arbitral tribunal did not have jurisdiction over the Appellant because the Dispute Resolution Mechanism in the Cooperation Agreement was not validly incorporated into the Supplemental Agreements.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal ruled that the arbitral tribunal lacked jurisdiction over International Research Corp PLC in a dispute with Lufthansa Systems, reversing the High Court's decision.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
International Research Corp PLCAppellantCorporationAppeal AllowedWon
Lufthansa Systems Asia Pacific Pte LtdRespondentCorporationAppeal DismissedLost
Datamat Public Company LtdRespondentCorporationNo ParticipationNeutral

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeYes
V K RajahJustice of the Court of AppealNo
Quentin LohJudgeNo

4. Counsels

Counsel NameOrganization
Tan Wei Ser VenetiaColin Ng & Partners LLP
Tien Chih Hsien MelanieColin Ng & Partners LLP
Subramanian A PillaiColin Ng & Partners LLP
Yek Jia Min JasminColin Ng & Partners LLP
Teh Shi YingAllen & Gledhill LLP
Dinesh Singh DhillonAllen & Gledhill LLP
Margaret Joan Lin Wei WeiAllen & Gledhill LLP

4. Facts

  1. The Appellant, Respondent, and Datamat entered into Supplemental Agreements related to the Cooperation Agreement.
  2. The Cooperation Agreement contained a multi-tiered dispute resolution mechanism, including arbitration.
  3. The Respondent filed a notice of arbitration with the SIAC, naming Datamat and the Appellant as respondents.
  4. The Appellant objected to the jurisdiction of the arbitral tribunal.
  5. The High Court dismissed the Appellant’s application, holding that the Tribunal did have jurisdiction.
  6. The Court of Appeal allowed the appeal, ruling that the Tribunal did not have jurisdiction over the Appellant.
  7. The Appellant's obligation was to act as a payment agent, paying the Respondent upon receiving funds from Thai Airways.

5. Formal Citations

  1. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another, Civil Appeal No 12 of 2013, [2013] SGCA 55
  2. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another, , [2013] 1 SLR 973

6. Timeline

DateEvent
Datamat and Thai Airways entered into the EDP System Agreement.
Respondent and Datamat entered into the Cooperation Agreement.
Datamat entered into a sale and purchase agreement with the Appellant.
Appellant, Respondent, and Datamat entered into Supplemental Agreement No 1 (backdated).
Meetings held between March 2006 and July 2009 to address payment dispute.
Appellant, Respondent, and Datamat entered into Supplemental Agreement No 2.
Respondent sent letters to the Appellant requesting payment of invoices.
Respondent sent letters to the Appellant requesting payment of invoices.
Respondent informed Datamat and the Appellant that it was terminating the Cooperation Agreement and Supplemental Agreements.
Respondent filed a notice of arbitration with the SIAC.
Appellant commenced OS 636/2012.
Appeal allowed; Tribunal did not have jurisdiction over the Appellant.
Grounds of decision delivered by the court.

7. Legal Issues

  1. Jurisdiction of Arbitral Tribunal
    • Outcome: The Court of Appeal ruled that the arbitral tribunal did not have jurisdiction over the Appellant.
    • Category: Jurisdictional
    • Sub-Issues:
      • Incorporation of arbitration clause by reference
      • Compliance with preconditions for arbitration
  2. Incorporation by Reference
    • Outcome: The Court of Appeal held that the Dispute Resolution Mechanism in the Cooperation Agreement was not validly incorporated into the Supplemental Agreements.
    • Category: Substantive
    • Sub-Issues:
      • Strict rule for incorporation of arbitration clauses
      • Objective intention of parties
  3. Conditions Precedent to Arbitration
    • Outcome: The Court of Appeal found that the preconditions for arbitration set out in cl 37.2 had not been complied with.
    • Category: Procedural
    • Sub-Issues:
      • Enforceability of preconditions
      • Compliance with preconditions

8. Remedies Sought

  1. Declaration that the Tribunal did 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
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and anotherHigh CourtYes[2013] 1 SLR 973SingaporeThe decision from which this appeal arose.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the approach to contractual interpretation.
HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte LtdCourt of AppealYes[2012] 4 SLR 738SingaporeCited regarding the enforceability of preconditions for arbitration.
Star-Trans Far East Pte Ltd v Norske-Tech Ltd and othersCourt of AppealYes[1996] 2 SLR(R) 196SingaporeCited for the strict rule requiring clear and express reference to incorporate an arbitration clause.
Habas Sinai Ve Tibbi Gazlar Isthisal Endüstri AS v Sometal SALEnglish High CourtYes[2010] Bus LR 880EnglandDiscussed the classification of cases into single contract and two-contract cases for incorporation of arbitration clauses.
Aughton Ltd (formerly Aughton Group Ltd) v MF Kent Services LtdEnglish Court of AppealYes(1991) 31 Con LR 60EnglandRelied upon in Star-Trans for the strict rule on incorporation of arbitration clauses.
T W Thomas & Co, Limited v Portsea Steamship Company, LimitedHouse of LordsYes[1912] AC 1EnglandFoundation for the strict rule requiring clear and express reference to incorporate an arbitration clause.
Sea Trade Maritime Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd (The “Athena”) (No 2)English High CourtYes[2007] 1 Lloyd’s Rep 280EnglandDiscussed the application of the strict rule in the context of insurance contracts.
Federal Bulk Carriers Inc v C Itoh & Co Ltd and Others (The “Federal Bulker”)EnglandYes[1989] 1 Lloyd’s Rep 103EnglandCase involving bills of lading and the strict rule.
Tjong Very Sumito and others v Antig Investments Pte LtdCourt of AppealYes[2009] 4 SLR(R) 732SingaporeCited for the modern judicial policy of promoting arbitration.
Trygg Hansa Insurance Co Ltd v Equitas Ltd and OthersQueen’s Bench Division (Commercial Court)Yes[1998] 2 Lloyd’s Rep 439EnglandDiscussed the conflicting authorities in England regarding the incorporation of arbitration clauses.
Astel-Peiniger Joint Venture v Argos Engineering & Heavy Industries Co LtdHong Kong High CourtYes[1994] 3 HKC 328Hong KongConsidered the law on incorporation of arbitration clauses by reference under the Model Law.
Gay Constructions Pty Ltd and Another v Caledonian Techmore (Building) Ltd and Hanison Construction Co LtdHong Kong High CourtYes[1995] 2 HKLR 35Hong KongReaffirmed the conclusion that an explicit reference to the arbitration clause is not required for incorporation.
Fiona Trust & Holding Corporation and Others v Privalov and OthersHouse of LordsYes[2008] 1 Lloyd’s Rep 254EnglandCited for the rule of construction that rational businessmen intend disputes to be decided by the same tribunal.
Econ Piling Pte Ltd v NCC International ABHigh CourtYes[2007] SGHC 17SingaporeCited for the assumption that parties to closely-related agreements intend to resolve disputes through the same mechanism.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SACourt of AppealYes[2007] 1 SLR(R) 597SingaporeHeld that an arbitral tribunal’s negative ruling on jurisdiction could not be set aside pursuant to s 24 of the IAA read with Art 34 of the Model Law 1985.
Halifax Financial Services Ltd v Intuitive Systems LtdEnglish High CourtYes[1999] 1 All ER (Comm) 303EnglandDiscussed compliance with dispute resolution clauses.
DeValk Lincoln Mercury, Inc, Harold G DeValk and John M Fitzgerald v Ford Motor Company and Ford Leasing Development CompanyUnited States Court of Appeals for the Seventh CircuitYes811 F 2d 326 (7th Cir, 1987)United StatesCase involving a motion by the defendants for summary judgment upon the plaintiffs’ failure to comply with a pre-litigation mediation clause.
Concordia Agritrading Pte Ltd v Cornelder Hoogewerff (Singapore) Pte LtdHigh CourtYes[1999] 3 SLR(R) 618SingaporeCase regarding the incorporation of an arbitration clause by reference.
Mancon (BVI) Investment Holding Co Ltd v Heng Holdings SEA (Pte) Ltd and othersHigh CourtYes[1999] 3 SLR(R) 1146SingaporeCase where the High Court held that an arbitration clause in a joint venture agreement had been validly incorporated into a subsequent supplemental agreement even though the latter agreement did not make any express reference to the arbitration clause.

13. Applicable Rules

Rule Name
Singapore International Arbitration Centre Rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
UNCITRAL Model Law on International Commercial ArbitrationSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration agreement
  • Dispute Resolution Mechanism
  • Incorporation by reference
  • Conditions precedent
  • Supplemental Agreements
  • Cooperation Agreement
  • Jurisdiction
  • Payment agent
  • UNCITRAL Model Law
  • International Arbitration Act

15.2 Keywords

  • arbitration
  • jurisdiction
  • contract
  • incorporation
  • Singapore
  • international
  • dispute resolution

17. Areas of Law

Area NameRelevance Score
International Arbitration90
Arbitration90
International Arbitration Act80
International Commercial Law70
Contract Law60
Breach of Contract50
Commercial Disputes40

16. Subjects

  • Arbitration
  • Contract Law
  • Jurisdiction