Malaysia: Close to ending Sulu arbitration claim after Dutch court win

Malaysia on Tuesday secured its third win against litigants who claim to be descendants of a former sultan, when a Dutch court dismissed a bid to enforce a multi-billion-dollar arbitration award against the Southeast Asian government.

Tuesday’s court decision in the Netherlands followed similar victories in French and Spanish courts earlier this year, after a Paris court awarded nearly U.S. $15 billion in arbitration to a group claiming to be heirs to the former sultanate of Sulu, a chain of islands between the southern Philippines and Borneo.

Malaysian Prime Minister Anwar Ibrahim hailed the “landmark victory” and dismissed as “illegitimate” the claims made by those who call themselves heirs to the Sulu sultanate.

“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.

Anwar said Malaysia would fight the “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 his country had spent in dealing with the claims. 

BenarNews contacted the Sulu heirs’ legal representative, Paul Cohen, for comment but he did not immediately respond.

The former Sultanate of Sulu was centered in the small archipelago by that name, which is located in the far south of the modern-day Philippines, but part of it stretched into what is now Sabah, an oil-rich state in the Malaysian portion of Borneo island. 

In 2022, a group of eight people claiming to be heirs of the last sultan of Sulu won the arbitration award against Malaysia from a French court, on the basis that the Southeast Asian nation in 2013 had stopped making annual payments to them under a deal dating to the 1800s.

In September, the group of claimants sought permission from a Dutch court to enforce the award in the Netherlands, Reuters reported. The Sulu claimants had sought to seize Malaysian assets in The Netherlands to enforce the award.

The Hague Court of Appeal’s decision to dismiss their lawsuit on Tuesday came after the Paris Court of Appeal earlier this month upheld Malaysia’s challenge to the arbitration award. The Paris court found that the arbitrator who ordered Malaysia to make the payment did not have jurisdiction in the case.

2013 invasion

In February, a Spanish court had nullified the actions of the same arbitrator and rejected the claimants’ appeal.

Another bid by the purported Sulu heirs to enforce the award in Luxembourg is scheduled to be heard by a court there in September.

Last July, Malaysian state oil firm Petronas received seizure orders on two of its units in Luxembourg, as the Sulu claimants attempted to enforce the arbitration award.

Malaysia stopped paying the claimants after a group of 200-odd armed members of the so-called Royal Sulu Force entered Sabah’s Lahad Datu district from the Philippines in an attempt to take over the state on Feb. 11, 2013. 

The 2013 invasion led to a standoff with Malaysian security officials that lasted more than six weeks.

Although the government of then-Prime Minister Najb Razak did not officially state that the invasion was the reason the payments stopped, he has often asked on his Facebook page why the Sulu heirs should be paid after what they did in 2013.

The claimants have denied any involvement in the invasion, and the group involved in the arbitration has condemned the attack, Reuters news agency reported.

Four years after Malaysia stopped annual payments to the Sulu heirs, the group of eight people claiming to be the Sulu sultan’s heirs, decided to begin arbitration in a European court.

In February last year, the Paris court ordered Malaysia to pay nearly $15 billion to the litigants, as compensation for failed payments since 2013. The amount included valuation of the land in Sabah and its natural resources such as oil and gas.