## Facts

- Datamat Public Co. Ltd. and Lufthansa Systems Asia Pacific Pte Ltd. entered a cooperation agreement for Lufthansa to supply and commission an MRO system as part of a larger EDP project for Thai Airways.
- The cooperation agreement contained a tiered dispute clause requiring mediation first, then arbitration in Singapore.
- International Research Corporation Public Co. Ltd. (IRCP) was not a party to the cooperation agreement but later became involved due to Datamat’s financial difficulties and Lufthansa’s payment concerns.
- Datamat, Lufthansa, and IRCP executed Supplemental Agreement No. 1 (SA1), setting a payment structure under which Datamat would transfer funds received from Thai Airways to IRCP, and IRCP would pay Lufthansa for work under the cooperation agreement.
- SA1 stated it was “annexed to and made a part of” the cooperation agreement and that other provisions of the cooperation agreement remained effective, while also stating IRCP assumed no obligations under the cooperation agreement itself.
- The parties later executed Supplemental Agreement No. 2 (SA2), implementing a mechanism for direct deductions from IRCP’s bank account to pay Lufthansa.
- A payment dispute arose; Lufthansa commenced SIAC arbitration against Datamat and IRCP, invoking the cooperation agreement’s arbitration clause.
- IRCP objected to jurisdiction, arguing it was not bound by the arbitration clause and that the clause’s pre-arbitration mediation requirement had not been satisfied.
- The tribunal issued a preliminary ruling asserting jurisdiction over IRCP; the High Court upheld that ruling on IRCP’s challenge.
- IRCP appealed to the Court of Appeal.

## Issues

1. Whether the cooperation agreement’s arbitration clause was incorporated by reference into SA1 and SA2 so as to bind IRCP, a non-signatory to the cooperation agreement.
2. Whether compliance with preconditions in a tiered dispute resolution clause (including a mediation step) is required before arbitration may be commenced, and whether strict (as opposed to substantial) compliance is necessary.

## Decision

- The Court of Appeal allowed the appeal and set aside the tribunal’s preliminary jurisdiction ruling as against IRCP.
- The arbitration clause in the Datamat–Lufthansa cooperation agreement was not validly incorporated into SA1 or SA2 in a manner binding IRCP; the tribunal therefore lacked jurisdiction over IRCP.
- The court held that where parties agree to pre-arbitration procedural steps as conditions precedent, those steps are enforceable and require strict compliance; substantial compliance is insufficient.

## Legal Principles

- An arbitral tribunal’s jurisdiction over a party depends on that party’s consent to arbitrate, assessed objectively from the contractual text and context.
- Incorporation of an arbitration clause by reference does not require formulaic wording in every case, but it must be sufficiently clear, in context, that the parties intended the arbitration clause to apply to the contract and bind the relevant party.
- The statement that a supplemental agreement is “annexed to and made part of” another contract does not, without more, impose the other contract’s arbitration clause on a non-signatory, particularly where the drafting indicates the non-signatory assumes no obligations under the primary contract.
- Multi-tier dispute resolution clauses can create enforceable conditions precedent to arbitration; when the agreed procedure is specified, courts should require strict adherence before arbitration is commenced.

## Conclusion

The court held IRCP was not bound to arbitrate under an arbitration clause contained in a separate cooperation agreement because the supplemental payment agreements did not clearly incorporate that clause against IRCP, and it clarified that agreed pre-arbitration steps in tiered dispute clauses are enforceable and require strict compliance.


Int’l Rsch. Corp. Pub. Co. v. Lufthansa Sys. Asia Pac. Pte. Ltd., [2013] SGCA 55 (Sing. Ct. App. 2013)