Malaysia will not pay Sulu sultan heirs

MALAYSIA HAS flatly rejected an order by a French court to pay heirs of the Sultan of Sulu over $14 billion based on the alleged violation of payments of RM5,300 cession money under the 1878 agreement signed by Sultan Jamal Al Alam, Baron de Overbeck and the British North Borneo Company’s Alfred Dent.

Spanish Arbitrator Gonzalo Stampa issued the award in a Paris court on February 28, but Malaysia maintained its sovereign immunity. 

The heirs’ claims were originally heard in Madrid until the Madrid High Court annulled Stampa’s appointment on grounds that Malaysia was not properly informed about the case and was thus “defenceless”. The case was later moved to the French capital. 

A report by the Spanish news website La Información which said that Stampa had issued the award, ruling that the treaty was a commercial “international private lease agreement.” By not paying the cession money since 2013, Stampa said Malaysia had breached the agreement and would have three months to pay up failing which interest would be charged if the decision was not accepted. 

Malaysia stopped paying the Sultan Sulu’s heirs their annual cession money after over 200 armed followers of the Sultan of Sulu, Jamalul Kiram III led by his younger brother Agbimuddin Kiram landed in Lahad Datu town in Sabah to press the ancestral claim on the oil-rich territory. Malaysia responded by sending troops and launching airstrikes before the stand-off ended. The conflict, which lasted more than a month, resulted in the deaths of 68 men from the Sulu sultanate, nine Malaysian armed services personnel and six civilians.  

On March 17, 2020, Kota Kinabalu High Court judge Datuk Martin Indang ruled that Malaysia was the proper venue to resolve disputes arising from the 1878 Deed of Cession and not the Spanish courts, which do not have authority nor jurisdiction over Malaysia. He said there was no binding agreement between the Government and the sultan’s heirs that compelled either party to also submit to arbitration in the event of a dispute. 

No way  

The Malaysian Foreign Ministry and the Attorney General issued a joint statement and said the Spanish High Court had decided in June 2020 that due process leading to the appointment of the arbitrator was not properly served or consistent with the Spanish High Court of Justice of Madrid’s case laws on the service of process on sovereign states. 

“As a consequence of the Nullification Decision, Dr Stampa is not an arbitrator in the purported arbitration proceedings and, therefore, all his decisions, including the Final Award, are null and void. The Government of Malaysia completely rejects the purported Final Award dated February 28, 2022, which was rendered by Dr Stampa,” the statement said.

It added that the award rendered by Stampa not only violated Malaysia’s sovereign immunity, but also was rendered in disregard of the Madrid and Paris court decisions.

“The Government of Malaysia strongly opposes the Final Award and upholds its position and stance to not recognise all the actions taken by Dr Stampa in the purported arbitration proceedings as well as all his illegal decisions and awards,” said the statement, adding that Malaysia did not participate in the purported arbitration proceedings because it did not recognise the claim and that it had always upheld and never waived its sovereign immunity as a sovereign state.

It said the Spanish public prosecutor has allegedly filed a criminal complaint against Stampa for serious contempt of court and professional intrusiveness, adding the subject matter of the claim is not commercial in nature and thus cannot be subject to arbitration and the 1878 Agreement contains no arbitration agreement.

“We further stress that the claimants’ identities are doubtful and have yet to be verified. Malaysia will continue to take all necessary actions, including legal actions, to put an end to the claim and to ensure that Malaysia’s interests, sovereign immunity and sovereignty are protected and preserved at all times,” the statement further said.

Obliged to pay

But a report by the Malay Mail quoted Sabah Law Society president Roger Chin  as saying that Malaysia is legally obliged to pay up to 14.9 billion (RM62.6 billion) to the descendants of the Sultan of Sulu for violating the treaty.

He explained that this is because Malaysia is a member of the New York Convention, however, Chin also said Malaysia can apply to set aside the award decision but has to do it in France where the arbitration court is based. “As Malaysia is a member of the New York Convention, it is obliged to enforce the award but has the option of making an application to set the award aside in France, where the award was rendered. If Malaysia refuses to make payment, the claimants will have the right under the New York Convention to enforce the award against Malaysian state assets in any of the 167 signatory state parties around the world,” he said.

Chin noted that the ruling made by the French arbitration court was contradictory to the 2020 decision made in the High Court Kota Kinabalu, adding that it remains to be seen which of the two decisions would be enforceable internationally. He explained that the 2020 court ruling, known as the Malaysian government vs Nurhima Kiram Fornan & Ors, began when the federal government initiated legal action against the claimants to stop them from proceeding with arbitration.

The High Court ruled in favour of the Malaysian government in its suit against eight of the supposed descendants of the Sultan of Sulu and said there was no binding agreement between Malaysia and the sultan’s heirs that compelled either party to submit to arbitration in the event of a dispute.

Chin said the Malaysian government had also sought a declaration, among others, that there was no arbitration agreement between the parties; and that Malaysia was the proper forum to resolve the dispute over territorial rights arising from the deed of cession.

While Malaysia did not appear at the Paris arbitration proceedings, he said unlike the Malaysian court where default judgments can be issued, it is not possible to issue a default award in international arbitration.

“Foreign courts are generally thought to be likely to have to give more weight and priority to tested conclusions contained in international arbitration awards rather than to untested conclusions contained in default court judgments. This will be an interesting situation and it remains to be seen if foreign courts will give more priority to the New York Convention than to bilateral treaties in respect of reciprocal enforcement of court judgments,” Chin was quoted saying.

North Borneo part of Sulu Sultanate

The Sultan of Sulu’s claim on Sabah has become a big political issue in Malaysia and now Datuk Seri Yong Teck Lee, an influential politician and who served as Chief Minister of Sabah, demanded that former Attorney General Tan Sri Tommy Thomas to retract his statement in his book “My Story; Justice in the Wilderness” that at some point in its history, North Borneo was part of the Sulu Sultanate.”

He said Thomas had no idea of Sabah’s history and made statements that were being used by the self-proclaimed heirs to the defunct Sulu Sultanate. “As it is, Tommy’s book has done damage to Sabah and Malaysia by being used to support the case of the Kiram claimants in a foreign country," he said.

In his book, Thomas stated on page 378 that:  “There were no legal grounds for Malaysia’s refusal to pay (the heirs of the Sulu Sultan) annually since 2013. It resulted in Malaysia being in breach of the 1878 agreement.”

Thomas’ statement, Lee said, was used by the descendants of the Sulu sultan in their claims in the Paris court. There was no immediate reactions from the heirs of the Sultan of Sulu. (Mindanao Examiner)