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Why Malaysia Owes $15 Billion To A Sultan’s Heirs. Hint: Colonial Dispute – IHNS

Malaysia is on the hook for the second largest arbitration award on file.

Kuala Lumpur:

Malaysia is scrambling to protect its property as a result of the descendants of the ultimate sultan of the distant Philippine space of Sulu look to implement a $15 billion arbitration award in a dispute over a colonial-era land deal.

In 1878, two European colonists signed a address the sultan for the use of his territory in present-day Malaysia – an settlement that neutral Malaysia honoured until 2013, paying the monarch’s descendants about $1,000 a yr.

Now, 144 years later after the distinctive deal, Malaysia is on the hook for the second largest arbitration award on file for stopping the funds after a bloody incursion by supporters of Sultan Mohammed Jamalul Alam’s heirs throughout which better than 50 people had been killed.

“It’s an interesting and peculiar case,” said lawyer Paul Cohen, a lead co-counsel for the sultan’s heirs from British regulation company 4-5 Gray’s Inn Sq..

For years, Malaysia largely dismissed the claims nevertheless in July, two Luxembourg-based subsidiaries of state vitality company Petronas had been served with a seizure uncover to implement the award that the heirs acquired in February.

The arbitration ruling in France adopted an eight-year approved effort by the heirs and $20 million in funds raised for them from unidentified third-party merchants, consistent with interviews with foremost figures throughout the case and approved paperwork seen by Reuters.

Malaysia didn’t participate in nor recognise the arbitration – allowing the heirs to present their case with out rebuttal – no matter warnings that it might be dangerous to ignore the strategy.

The claimants, along with some retirees, are Filipino residents primary middle-class lives, a far cry from their royal ancestors of the Sulu sultanate that after spanned rainforest-covered islands throughout the southern Philippines and parts of Borneo island.

The heirs argue that the nineteenth century deal was a industrial lease, which is why they chose arbitration. As well as they claimed compensation for the large vitality reserves which have since been discovered throughout the territory they gave up in Malaysia’s Sabah state on Borneo.

Malaysia disputes that, saying the sultanate ceded sovereignty and the arbitration was illegitimate.

“The arbitration is a cultured fiction, veiled as a approved course of,” Uria Menendez, a Spanish regulation company representing Malaysia, knowledgeable Reuters.

Malaysia has obtained a hold in France pending an enchantment – a course of which may take years – nevertheless the award stays enforceable globally beneath a U.N. convention on arbitration.

Poorest Sultan

Malaysia honoured the colonial-era deal until 2013, when supporters of the late Jamalul Kiram III, who claimed to be the rightful sultan of Sulu, tried to reclaim Sabah.

Clashes erupted when about 200 supporters arrived in boats from the Philippines and lasted virtually a month.

Kiram, who claimed to be the “poorest sultan on this planet”, was not certainly one of many court-recognised heirs who obtained funds from Malaysia.

The eight claimants throughout the arbitration – along with Kiram’s daughter and cousins – who obtained the annual price have condemned the assault.

Up until the intrusion, the Malaysian embassy in Manila wrote a cheque to the claimants yearly for “cession money”, consistent with cheques and correspondence from the embassy to the heirs and shared with Reuters by the heirs’ attorneys.   

Malaysia’s then-prime minister, Najib Razak, knowledgeable Reuters he had stopped the funds on account of public anger over the incursion, acknowledging the reason publicly for the first time. 

“I felt it was incumbent upon my duty and obligation to protect the sovereignty of Sabah and the people of Sabah,” he said, together with he had not anticipated retaliatory approved movement. 

The claimants, by way of their attorneys, declined to be interviewed.  

Cohen, the heirs’ lawyer, first heard of their claims from an oil and gasoline skilled he cross examined in 2014 in an unrelated case.

Realizing they didn’t have the financial means, Cohen in 2016 launched on board Therium, a British company that has bankrolled approved actions by elevating money from institutional merchants, along with a sovereign wealth fund.

Therium carried out 9 rounds of funding for the case, all through which third-party merchants repeatedly assessed its deserves, said Elisabeth Mason, a lead co-counsel for the claimants with 4-5 Gray’s Inn Sq..

The case has worth over $20 million, along with attorneys and researchers in eight jurisdictions, she said.

“Consumers don’t make investments evenly in such points,” she said. 

Therium said it might proceed to finance efforts to implement the award. It declined to provide particulars.


The heirs notified their intention to start arbitration in 2017 in Spain and initially sought $32.2 billion in compensation, consistent with the award assertion.

Malaysia’s first response bought right here in 2019 when then-attorney regular Tommy Thomas supplied to resume the annual funds and pay 48,000 ringgit ($10,800) in arrears and curiosity if the arbitration was dropped.   

Thomas believed the requires had been “absurd and ludicrous” nevertheless made the present after colleagues steered him that it was “perilous” to disregard the arbitration as Malaysia’s abroad property could very nicely be at risk, he wrote in a 2021 memoir.  

The heirs rejected Thomas’ present and the arbitration went on with out Malaysia’s participation. 

Malaysia effectively challenged the appointment of Gonzalo Stampa as the one actual arbitrator in a Spanish court docket docket last yr.

Nevertheless Stampa argued in his award assertion that the courts didn’t have jurisdiction over arbitration, and moved the case to France to ship the award – actions that Malaysia says had been unlawful.

Stampa is now coping with felony proceedings in Spain following a grievance filed by Malaysia. He declined to comment to Reuters.

By snubbing the arbitration, Malaysia is confined to arguing the procedural validity barely than making a case in the direction of the heirs’ claims, said N. Jansen Calamita, head of Funding Laws and Protection on the Nationwide School of Singapore.  

“It was a harmful method and ultimately, I don’t suppose it has served them properly,” he said.


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