Sabah Arbitration Ruling | Sulu Heirs Seize Petronas Assets | $14.9 Billion Award

Despite a stay of the case issued by a French judge, the heirs of a 19th-century sultanate are attempting to take Malaysian government assets all over the world, in an effort to enforce a $14.9 billion arbitration verdict they obtained against Malaysia, according to their attorneys. To resolve the dispute over the 1878 land deal between the sultanate and a British trading company, a French arbitration court ordered Malaysia to pay the amount to the heirs of the last Sultan of Sulu in February. Malaysia announced on Wednesday, July 13, that the Paris Court of Appeal had imposed a stay on the ruling after concluding that the award's enforcement might violate the nation's sovereignty.

THE STAY

The stay, according to Parliament and Law Minister Wan Junaidi Tuanku Jaafar, will stop the award from being implemented while Malaysia seeks to overturn the decision. Prior to this, Malaysia hadn't taken part in the arbitration. However, the claimants' attorneys assert that the New York Convention, a United Nations treaty on international arbitration recognized in 170 nations, continues to make the February judgment legally enforceable outside of France. According to Paul Cohen, the heirs' principal co-counsel at the London-based law firm 4-5 Gray's Inn Square, the 'stay' that seems to comfort the Malaysian government briefly delays local enforcement only in one country, France itself, and does not apply to the other 169 countries. With few exclusions, such as diplomatic facilities, any Malaysian government-owned property inside of countries that are parties to the U.N. Convention may be considered for the purposes of enforcing the award, according to Elisabeth Mason, also a lawyer representing the heirs. Law Minister Wan Junaidi, declined to comment.

HISTORY OF SABAH DISPUTE

The heirs assert that they are successors-in-interest to the last Sultan of Sulu, Jamalul Kiram II. The Sultan made a deal with a British trading company in 1878 to allow the company to exploit resources in the territory he controlled, including what is now the oil-rich Malaysian state of Sabah, on the northernmost part of Borneo. Malaysia assumed deal obligations after gaining independence from Britain, paying the Sultan's heirs an annual token fee. But in 2013, Malaysia stopped making payments, claiming that Sabah belonged to its territory and that no one else had any right over it.

SIEZING OF MALAYSIAN ASSETS

In an effort to enforce the judgement, the claimants last week made a move to seize two units of state-oil firm Petronas in Luxembourg. Petronas has called the seizure "baseless," and asserted that it will defend its legal position, also citing that the units in question have divested their assets. The units, according to the heirs' attorneys, are presently under the custody of bailiffs in Luxembourg, pending any appeal by Petronas to challenge the siezure. Mason stated that they note Petronas’ description of certain transactions, and they also note their statement that those transactions are complete. “We will discover the full picture of all assets in due course,” Mason added.

While the arbitration case is civil in nature and is separate from the Philippine government's claim, the verdict has caused a noisy blame-game among Malaysian politicians and has since sparked a louder debate on the decades-old dispute. How will this arbitration case progress in the long run? Let us know in the comments section. And please do watch out for our next video only here on Tiger Philippines.

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