Malaysia does not recognise arbitration court ruling granting billions to Sulu Sultan's descendants

SHAH ALAM - The Malaysian government will not entertain the demand to pay RM63 billion in compensation to the descendants of the Sultan of Sulu.

In a joint statement on Wednesday, the Foreign Ministry and the Attorney General’s Chambers (AGC) stated that Malaysia does not recognise the demand made through a purported arbitration proceedings in Paris.

“Malaysia did not take part in the said arbitration proceedings and the country has always upheld and has never waived its immunity as a sovereign nation.

"In addition, the subject matter of the claim is not commercial in nature and could not be subjected to arbitration and there is no provision in the 1878 Agreement stating the arbitration agreement,” the statement said.

The ministry and AGC also stressed that the identities of the claimants were doubtful and have yet to be verified.

“On Jan 14, 2020, the High Court of Sabah and Sarawak which convened in Kota Kinabalu, made a decision which was not in favour of the claimant by ruling that the 1878 Agreement did not contain any provisions on arbitration.

“The arbitrators have no jurisdiction to resolve the matters raised and that the Sabah High Court is the neutral and proper forum to determine any claims related the Agreement.

“The Malaysian government has filed a bid for the recognition and enforcement of the Sabah High Court decision in the Madrid High Court, in Spain. However, the bid has yet to be heard,” the statement said.

Following the Malaysian government’s bid, on June 29, last year, the Madrid High Court ruled that the notice of the proceedings for appointment of the arbitrator for purposes of the claim was not properly served to Malaysia in accordance with peremptory international rules and Spanish law.

It was also in line with the previous decision by the Madrid High Court on the service of notice process on sovereign states.

As a consequence of the nullification decision, Spanish arbitrator Gonzalo Stampa, was no longer an arbitrator in the purported arbitration proceedings and that all his decisions including the final award were null and void.

The Malaysian government has completely rejected the final award dated Feb 28, 2022, issued by Stampa.

The statement also said the Malaysian government will continue taking necessary actions including legal actions to put a stop to all the claims to protect the interests and sovereignty of the country.

On Monday, Spanish news website La Información reported that Stampa had ordered Malaysia to pay compensation of at least US$14.92 billion (RM62.59 billion) to the descendants of the Sultan of Sulu.

Stampa was quoted saying that by not paying the cession money since 2013, Malaysia has violated the 1878 Agreement which was signed by Sultan Jamal Al Alam, Baron de Overbeck and Alfred Dent of the British North Borneo Company.

He said Malaysia now has three months to pay the compensation or be at risk of paying interests, unless the award was struck out.