KUALA LUMPUR (Feb 28): A successful appeal by Malaysia in France against the claims of the self-proclaimed Sulu heirs would support the government’s global strategy to stave off the US$14.92 billion dispute.

The Paris tribunal in September 2021 issued an order to allow the execution of the preliminary award favouring the Sulu claimants. Malaysia is appealing against the order, and a decision by the French court on this appeal could be made this June.

The final award of US$14.92 billion was issued by Spanish arbitrator Gonzalo Stampa on Feb 28, 2022 in the French arbitration court, after the arbitration process was moved from Spain where Stampa’s appointment was annulled.

The Sulu claimants subsequently sought to execute the final award in other countries including Luxembourg and the Netherlands to seize assets linked to the Malaysian government as part of the claims — what the Malaysian government has disputed as forum shopping.

Speaking at a briefing with Members of Parliament on the Sulu dispute here, Malaysia’s Solicitor General II Datuk Siti Zainab Omar said it has been a challenge for Malaysia to formulate a global strategy as each country has its own jurisdiction.

“We did explore going to one court and having one declaration [to annul the final award]... but if you have a declaration in the UK [for example], it does not apply to other jurisdictions.

“Especially because the final award was declared in France, we are challenging [it there]. Once [the French courts] decide that the final award is not proper, we can go to other countries and [question] the enforcement of a judgment which is not recognised where it was issued,” Siti Zainab said.

“We do have a battle, because [the claimants and its legal representatives] have other arguments as well,” she said. “But we are quite hopeful we have grounds to challenge.”

The case — said to be the second largest in international arbitration history — is one that is "unusual", and "non arbitrable", said Minister in the Prime Minister's Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said.

"The Award has breached the principle of international public policy involving Malaysia's diplomatic immunity and jurisdictional immunity, as well as sovereignty," she said in a statement.

In a response following the MPs' briefing, the claimants' co-counsel Elisabeth Mason told The Edge: "This is the anniversary of the Final Award issued in Paris. Annual interest at 10% is set into the Award.

"Shouting about sovereignty and shadow boxing the wrong opponents for the last 12 months has cost the Government of Malaysia one and a half billion dollars. And it has got them nowhere," Mason said.

The eight claimants had initiated the legal action on grounds that Malaysia had breached a 145-year-old contract with the Sultan of Sulu or his descendants after the government halted its annual payment of RM5,300 in exchange for perpetual sovereign rights over what is part of Sabah today.

The payment was stopped following the Lahad Datu armed incursion in 2013, said to be linked to the Sulu Sultanate.

At the briefing,  Azalina pointed out that one of the eight claimants is believed to have family ties to one of the Lahad Datu insurgents currently on death row.

“The important element is the eight claimants plus the commercial jurisdiction.... If they are really related, why are there only eight of them [making the claim]?

“G2G-wise (government-to-government), the Philippines government is not involved in [the dispute]. This is considered a private matter [in the court’s view]. But you have eight claimants going for commercial arbitration… are they representing [all] Sulu [Sultan] descendants? I’m not sure. That’s why the locus itself should be questioned,” she said.

Azalina told reporters on Tuesday that the government is investigating whether the Cabinet gave the nod to Tan Sri Tommy Thomas to issue a letter to the purported Sulu “heirs” in 2019.

The letter, issued by Thomas when he was attorney general, expressed the government’s willingness to resume repayment and outstanding arrears in relation to the Sabah land lease contract in 1878 involving the Sulu Sultanate.

The payment was halted following the Lahad Datu armed incursion in 2013; that, and the letter formed the basis for what the claimants said was a breach of contract by the Malaysian government in their US$14.92 billion claim in the French arbitration court.

Tommy Thomas, when contacted, declined to comment.

Below is an excerpt of the Q&A with Azalina at a short press conference after a briefing with MPs on the Sulu dispute (shortened for length and clarity).

Q: Isn’t an offer to pay an admission of guilt?

Azalina: This is why we are trying to investigate, when the letter from [Tan Sri Tommy Thomas] came out, was it authorised? When it comes to the issue of sovereignty, it is the same with the Pulau Batu Putih [dispute] — you have to go back to the Cabinet.

Any litigation matter, claim or counterclaim, the AGC will receive a copy first. Then you have to report to the ministry in charge, who will bring it to the Cabinet.

We are trying to investigate whether any admission on the part of the Government of Malaysia then, was endorsed by the Cabinet. Whether the Government of Malaysia is aware. We don’t know....  That, we are still investigating.

Anything I do on international matters… I stand guided by how the other agencies and ministries look at matters, then I bring [the matter] to the Cabinet. That is the protocol for our government.

Q: The ability to seize our assets makes it seem like the case has merits.

No. I think that is just the wrong interpretation. I said from the beginning, I explained about forum shopping. When you have an award, you must allow that jurisdiction to settle the award.... The matter becomes more confusing because they are jumping [from one jurisdiction to another].

Q: Are they the same parties that the government has been paying to, up until 2013?

To be very honest, we are trying to find out — who did we really pay? I really don’t know the whole process [in terms of what] the government did [and] who did the government pay to. Is it [paid to] the Sulu claimants themselves, or to their lawyers? We are trying to figure it out.