Malaysia has won another legal victory in its bid to overturn a multi-billion-dollar arbitration award handed down against it last year over an obscure, colonial-era land deal. In a ruling yesterday, the Hague Court of Appeal dismissed a bid to enforce the $15 billion award granted by a Paris tribunal last year in favor of eight Philippine citizens who claim to be the legal descendants of Jamalul Kiram II, the last Sultan of Sulu.
The award was granted to the descendants over a deal that Jamalul Kiram II 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.
While Malaysia secured a stay on the award in France, the ruling remains enforceable overseas under a U.N. treaty on arbitration and the claimants have since sought its enforcement in several European jurisdictions. Last September, the heirs asked a Dutch court to recognize and enforce the award in the Netherlands, and allow them to seize Malaysian assets to this end. They have attempted to do the same in France and Luxembourg.
However, as Reuters reported, citing a notice on the court’s website, judges ruled that the 1878 agreement lacked a clause binding parties to arbitration. It also ruled that the French stay meant the claim was not enforceable in the Netherlands.
The Dutch ruling is just the latest to come down in Malaysia’s favor in connection with the case in recent months. The Paris Court of Appeals ruled earlier this month that the arbitration court that ordered Malaysia to make the payment to the Sulu heirs did not have jurisdiction to rule in the case. A Spanish court also ruled in Malaysia’s favor in February, nullifying the actions of the Spanish arbitrator and rejecting the claimants’ appeal.
In a statement emailed to reporters following the ruling, Malaysian Prime Minister Anwar Ibrahim hailed the “landmark victory” and expressed hopes that it “will put an end to the frivolous attempts” of the claimants to enforce the award in foreign jurisdictions.
“The government of Malaysia is confident that we are now closer than ever to completely nullifying the sham and abusive final award … thus consigning the claimants’ flawed claims to history,” Anwar said in a statement.
He added that this government “will fight by any means necessary against this flagrant exploitation and abuse of the international arbitral system as well as take all necessary actions to recover the costs for the public resources that Malaysia has been forced to expend in dealing with these claims.”
The curious legal case centers on the deal that was signed in 1878 between a European trading company and the Sultan of Sulu for use of his territory, which spanned parts of the southern Philippines and present-day Malaysia. After independence, Malaysia paid a token annual sum to the sultan’s descendants to honor the agreement. However, it ceased the payments in 2013, after other supporters of the former sultanate, including a self-claimed Jamalul Kiram III, launched an armed incursion into eastern Malaysia.
Several years later, the heirs took legal action against the government of Malaysia, claiming that they were not involved in the incursion and seeking arbitration over the suspension of payments, though the eventual award was far in excess of the value of the payments. As BenarNews reports, a court in Luxembourg is set to rule in a similar case in September.