Image: Reuters Berita 24 English - The descendants of the last sultan of the isolated Philippine territory of Sulu are attempting to enforce...
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| Image: Reuters |
Berita 24 English - The descendants of the last sultan of the isolated Philippine territory of Sulu are attempting to enforce a $15 billion arbitration verdict in a dispute over a colonial-era property sale, and Malaysia is trying to protect its investments.
Two European colonists agreed to utilise the sultan's territory in what is now Malaysia in 1878; independent Malaysia upheld this agreement until 2013, paying the monarch's heirs around $1,000 year.
144 years after the original agreement, Malaysia is now liable for the second-largest arbitration judgement ever for discontinuing the payments following a deadly incursion by followers of Sultan Mohammed Jamalul Alam's descendants that resulted in the deaths of over 50 persons.
Paul Cohen, a principal co-counsel for the sultan's heirs at the British legal firm 4-5 Gray's Inn Square, described the case as "fascinating and peculiar."
Despite serving two Petronas subsidiaries in Luxembourg with a seizure order in July to implement the award the heirs had won in February, Malaysia had for years mostly rejected the claims.
According to Reuters' conversations with key players in the case and legal documents that it has access to, the arbitration decision in France came after an eight-year legal battle by the heirs and $20 million in money that were generated for them from unnamed third-party investors.
Despite being warned that it would be risky to ignore the arbitration, Malaysia did not take part in or recognise it, leaving the heirs to submit their case without challenge.
The claimants, some of whom are retirees, are middle-class Filipino citizens, in stark contrast to their former royal forebears who ruled over islands covered in rainforest in the southern Philippines and portions of Borneo island during the Sulu sultanate.
The heirs selected arbitration because they contend that the 19th-century agreement was a commercial lease. Additionally, they demanded compensation for the enormous energy reserves that were later found in the land they ceded in Malaysia's Sabah state on Borneo.
Malaysia contests that claim, claiming that the sultanate lost sovereignty and that the arbitration was invalid.
According to Uria Menendez, a Spanish law firm that is representing Malaysia, "The arbitration is a cunning farce, disguising itself as a legitimate process."
In France, Malaysia has acquired a stay pending an appeal, which might take years; nonetheless, the award is still valid worldwide because to a U.N. arbitration treaty.
PORFIEST SULTAN
Until 2013, when proponents of the late Jamalul Kiram III—who asserted to be the legitimate sultan of Sulu—attempted to retake Sabah, Malaysia upheld the terms of the colonial agreement.
When roughly 200 supporters came in boats from the Philippines, fighting broke out and lasted for about a month.
Kiram, who proclaimed to be the "poorest sultan in the world," was not one of the heirs who had received funds from Malaysia and had been acknowledged by the court.
The eight arbitration claimants who got the yearly payout, including Kiram's daughter and cousins, have denounced the assault.
According to checks and correspondence from the embassy to the heirs that were supplied with Reuters by the heirs' attorneys, up to the intrusion, the Malaysian embassy in Manila wrote a cheque to the claimants every year for "cession money."
Najib Razak, Malaysia's then-prime minister, revealed to Reuters that he had suspended the payments because of the outcry over the incursion, officially identifying the cause for the first time.
He added, adding that he had not anticipated legal retaliation, "I believed it was incumbent upon my duty and responsibility to safeguard the sovereignty of Sabah and the people of Sabah."
Through their attorneys, the claimants declined to participate in an interview.
The oil and gas expert Cohen cross interviewed in 2014 for a different case was how the heirs' attorney, Cohen, first learned of their claims.
Cohen hired Therium, a British company that has funded legal proceedings by raising money from institutional investors, including a sovereign wealth fund, in 2016, knowing they lacked the necessary financial resources. Therium has previously funded legal actions.
According to Elisabeth Mason, a key co-counsel for the claimants with 4-5 Gray's Inn Square, Therium completed nine rounds of funding for the case, during which time outside investors constantly evaluated its merits.
According to her, the litigation has cost over $20 million, including the fees of attorneys and experts from eight different countries.
Investors don't take such decisions lightly, she said.
Therium declared that it would keep funding initiatives to uphold the honour. It choose not to give more information.
'LUDICROUS'
According to the award declaration, the heirs first requested $32.2 billion in compensation when they announced their decision to start arbitration in Spain in 2017.
The first reaction from Malaysia came in 2019 when Tommy Thomas, who was then the attorney general, proposed to begin the yearly payments and pay 48,000 ringgit ($10,800) in arrears and interest if the arbitration was dismissed.
Thomas said in a book from 2021 that he thought the demands were "absurd and stupid," but he nonetheless made the offer after colleagues warned him that it would be "perilous" to ignore the arbitration because Malaysia's overseas assets may be at jeopardy.
Thomas' offer was rejected by the heirs, and Malaysia was not involved in the arbitration.
In a Spanish court last year, Malaysia successfully contested the choice of Gonzalo Stampa as the single arbitrator.
However, Malaysia claims that Stampa's conduct were illegal because he relocated the case to France to give the award and claimed in his award statement that the courts lacked jurisdiction over arbitration.
Following a complaint from Malaysia, Stampa is currently being prosecuted in Spain. To Reuters, he declined to comment.
According to N. Jansen Calamita, Director of Investment Law and Policy at the National University of Singapore, by refusing to participate in the arbitration, Malaysia is forced to focus on the procedural legitimacy of the proceedings rather than presenting evidence to refute the claims of the heirs.
He stated, "I don't think it has served them well in the end. It was a hazardous plan."
