Boy, that’s one illegible data sheet. If you zoom it to 150% it gets a bit more readable.
It looks like “C” is the common pin. “T” gets connected to “C” when you push it straight in; “1” or “2” get connected to “C” when it is pushed ccw or cw.
So tie “C” to ground, “T”, “1”, and “2” to I/O pins on the Arduino, set as inputs with on-chip pullups enabled, or use external pullup resistors.
Then, from software’s point of view, treat it like 3 pushbuttons.