Malaysia to fight Sulu heirs claims

KUALA LUMPUR continues to defend its rights against any attempts by the heirs of the Sultan of Sulu to grab Malaysia’s assets, The Malay Mail quoted Minister Datuk Seri Azalina Othman Said.

Azalina criticised the actions of the self-styled Sulu heirs and their lawyers saying “we again remind the public that the purported heirs and their counsels are trying to distort the truth before the media, just as they have done before the courts.”

“This case concerns a genuine arbitral scandal that has undermined the two most fundamental institutions of the rule of law: respecting the law and obeying the courts, and Malaysia will spare no effort in defending its rights,” said Azalina, who is in-charge of law and institutional reform.

Noting that several news outlets have reported on a purported new attempt by the alleged Sulu heirs in Luxembourg to seize assets belonging to Petronas, Azalina said Malaysia has not received formal notice of the alleged seizure orders. “Consequently, this office is unable to confirm the correctness or accurateness of these media reports,” she said.

While casting doubt on the purported new seizure bid, Azalina pointed out that the alleged Sulu heirs had already failed in their previous first attempt to seize Petronas’s assets in Luxembourg. She said the Sulu heirs’ bid to seize Malaysia’s assets is based on the alleged arbitration award by Gonzalo Stampa — whose appointment as arbitrator has been cancelled by the same court which appointed him initially.

“If they prove to be true, this would not be the first time that the purported Sulu heirs attempt to seize Malaysia’s assets in Luxembourg on the basis of a purported final award rendered by Spanish lawyer whose appointment as arbitrator was nullified by the same court that had initially appointed him without hearing Malaysia. Rather, this alleged new attempt to attach assets would follow a first and failed attachment, which the Luxembourg courts recently lifted,” she said, referring to the previously failed seizure order according to its legal term “attachment”.

But if such a second seizure order does exist, Azalina said Malaysia will fight off such bids in the courts, the Malay Mail reported. “As it has done to date after it is properly summoned, Malaysia will continue to defend its rights vigorously before the courts in order to ensure that this second attachment (if existent) is also promptly lifted by the Luxembourg courts just as the first attachment was lifted,” she said.

Timeline

Last February 28, Stampa gave his purported arbitration award — or “final award” — by ordering Malaysia to pay US$14.92 billion in compensation to eight individuals who claimed to be the heirs of the now-defunct Sulu Sultanate. On January 24 this year, the District Court of Luxembourg decided to lift or set aside a seizure order on two Petronas subsidiaries and their assets. The seizure order was previously issued last July 11 upon request of the alleged Sulu heirs. On January 30, Azalina said Malaysia is also currently challenging an ex parte Exequatur Order — or a May 18, 2022 order which recognised Stampa’s purported arbitration award in Luxembourg — before the Luxembourg Court of Appeal.

Azalina had also explained the District Court of Luxembourg’s decision to lift the July 11, 2022 seizure order on Petronas assets was due to the Sulu claimants’ failure to reveal their real addresses which would hamper documents being served on them and enforcement of any potential judgment against them.

Malaysia continues to dispute the appointment of Stampa as arbitrator and also challenges the entire arbitration process and his award in favour of the Sulu claimants as invalid and illegal. Malaysia’s Foreign Affairs Ministry and Attorney-General’s Chambers on March 2 stressed that the eight Sulu claimants’ identities are doubtful and have yet to be verified.

The eight Sulu claimants were last year reported as comprising three retirees, three unemployed persons aged 51 to 70, one 54-year-old school administrator and a 70-year-old businessman, with litigation funding firm Therium also reported to be funding the Sulu claimants’ legal and arbitration fees which have cost millions of US dollars. Following recent news reports of the purported second seizure bid, Petronas in a brief statement maintained that the Sulu claimants’ action against its two Luxembourg subsidiaries is “baseless” and said it will continue to defend its legal position.

Petronas

The Diplomat also reported that Court bailiffs in Luxembourg issued fresh seizure orders for two units of the Malaysian state oil firm Petronas – the latest twist in a complex legal case that descendants of a defunct sultanate have mounted against Malaysia over a colonial-era land agreement.

It said the news was broken by Reuters, which cited the heirs’ lawyer and court documents. It also confirmed with Petronas the new seizure order for the company’s Luxembourg-based Petronas Azerbaijan and Petronas South Caucasus units.

The French arbitration court ordered Malaysia to pay $14.9 billion to the legal descendants of Jamalul Kiram II, the last Sultan of Sulu. The agreement is related to a deal that the Sultan of Sulu signed in 1878 with a British trading company over the use of his territory, in what is now the Malaysian state of Sabah on the island of Borneo.

After independence, Malaysia honored the agreement, paying the sultan’s descendants a token annual sum of a few thousand dollars. But it cut off the payments after more than 200 armed militants led by another self-claimed descendant of Jamalul Kiram II invaded the Lahad Datu district, in Sabah, from the southern Philippines.

Kuala Lumpur, which unsurprisingly rejects the claim outright as a bogus and opportunistic cash-grab, has refused to take part in the arbitration, and has vowed to fight the enforcement of the award. Petronas has taken a similar position. When contacted by Reuters, the giant state firm reiterated its previous position that the heirs’ actions were baseless and the company will continue to defend its legal position. The multi-billion-dollar award is also seemingly disproportionate given the relatively paltry annual payments that Malaysia was making prior to 2013.

In June of last year, Malaysia’s government obtained a stay order against the enforcement of the French court ruling, on the grounds that it might infringe on the country’s sovereignty. But the heirs’ lawyers argue despite the stay order, the French ruling remains legally enforceable outside France – and the legal team has attempted up their efforts to seize Malaysian government assets around the world.

The following month, lawyers representing the heirs made an initial attempt to seize the two Petronas subsidiaries. Last month, Azalina announced that the order had been set aside by a Luxembourg district court, describing it as a “significant victory” for Malaysia.

The latest development suggests that the lawyers representing the Sulu heirs will continue to press their claim until they exhaust all possible. Reuters quoted Paul Cohen, one of the legal team, as saying that the first seizure order had been lifted due to a technicality. The lawyers for the Sulu sultan’s heirs have leaned heavily on anti-colonial justifications for the case, framing it as a case of “justice” for those “dispossessed” by Western imperialism, and seeking to play into the growing European awareness and guilt about the continent’s vicious colonial legacy. (Malay Mail, The Diplomat and The Mindanao Examiner)