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.