This article first appeared in Forum, The Edge Malaysia Weekly on August 31, 2026 - September 6, 2026

A US$15 billion award over Sabah has been annulled in full, its arbitrator criminally convicted, and every attempt to enforce it defeated.

Here is how, and why, it matters far beyond the sum involved.

In February 2022, a sole arbitrator sitting in Paris purported to order Malaysia to pay just under US$15 billion, some RM62 billion, to a group of individuals claiming descent from the long-defunct Sultanate of Sulu.

It was one of the largest arbitral awards ever made against a sovereign state, and it was issued in a proceeding to which Malaysia had never agreed, by an arbitrator whose own appointment a court had already annulled.

Today, the award has been annulled at the seat and is, for all practical purposes, a dead letter. The arbitrator who issued it has been criminally convicted. Every attempt to enforce it, across Luxembourg, the Netherlands and France, has been turned back, and the courts in those jurisdictions have ruled in Malaysia’s favour, including apex-court rulings in the Netherlands and France on key enforcement and jurisdictional issues.

On Dec 9, 2025, the Paris Court of Appeal delivered the decisive blow, annulling the award entirely and ordering the claimants to pay Malaysia’s costs.

For most Malaysians, the headline — “Malaysia wins the Sulu case” — is by now familiar.

What is less understood is how a claim of this magnitude came to be made at all, how it was dismantled, and why the outcome matters far beyond the money. This is that story.

The dispute has its origins in an agreement concluded in 1878 between the Sultan of Sulu and two European adventurers, Alfred Dent and Baron Gustavus von Overbeck, acting for what would become the British North Borneo Company.

Under it, the Sultan granted rights over territory in North Borneo, today the Malaysian state of Sabah, in return for an annual payment.

Whether that grant was a permanent cession or merely a lease has been contested for well over a century, turning on the meaning of a single term in the deed.

What is not in doubt is that, after Malaysia was formed in 1963, it continued to make the annual payment to the Sultan’s heirs. Those payments stopped in 2013, following an armed incursion into Sabah by a group asserting the Sultanate’s claim — the Lahad Datu standoff.

It was against that backdrop that persons claiming to be heirs turned to arbitration.

One defect ran through the entire claim, and it is worth stating plainly, because it is the key to everything that followed. Arbitration is a matter of consent. No party can be compelled to arbitrate a dispute it never agreed to arbitrate in the first place.

The clause the claimants relied on named a specific person to resolve any dispute, namely, the British Consul General for Borneo, a colonial office that ceased to exist with decolonisation. When the office disappeared, so did the mechanism the parties had agreed upon. There was, in short, no valid agreement to arbitrate capable of binding the modern Malaysian state.

Malaysia’s position was consistent from the outset. It had never consented to arbitration, it had never waived its sovereign immunity, and the proper forum for any claim was the courts of Sabah. In 2020, the High Court of Sabah and Sarawak agreed, granting Malaysia a series of orders to precisely that effect.

The arbitration nonetheless went ahead. A court in Madrid had appointed a Spanish arbitrator, Gonzalo Stampa, in 2019. When the Madrid High Court later annulled that appointment — Malaysia had not been properly notified of the proceedings — Stampa did not stop.

Instead, he moved the seat of the arbitration from Madrid to Paris and, in February 2022, issued his US$15 billion award, notwithstanding that the very authority under which he had been appointed had been set aside.

That manoeuvre, namely, relocating a proceeding notwithstanding the Madrid court’s order, lies at the heart of what Malaysia and others have described as an abuse of the arbitral process. An attempt to misuse a respected system of private dispute resolution to hold a sovereign state to ransom.

Nor did the claim arise in a vacuum. It was reportedly backed by third-party litigation funding, attributed in public reports to Therium Capital Management, whose commercial model would ordinarily involve a return if the claim succeeded.

The reckoning came in the French courts, at the seat of the arbitration. The Paris Court of Appeal rejected enforcement of Stampa’s ruling on jurisdiction, and in November 2024 the French Court of Cassation, the highest court in the French system, upheld that decision, confirming that the arbitration clause was inapplicable and that no valid agreement to arbitrate capable of binding Malaysia remained.

With the jurisdictional foundation gone, the annulment of the final award followed. On Dec 9, 2025, the Paris Court of Appeal annulled it in full and ordered the claimants to pay Malaysia €200,000 in costs.

The claimants’ legal team has publicly indicated an intention to appeal the annulment. Any further challenge would lie before the Court of Cassation. Whether or not it is pursued, it would have to confront the grounds on which the annulment rests, that is to say, the absence of any valid agreement to arbitrate — the very point decided in Malaysia’s favour in November 2024.

There is a further, extraordinary dimension to this case, one rarely seen in international arbitration. The arbitrator himself was prosecuted. For continuing the arbitration in defiance of the Spanish court’s orders, Stampa was convicted of contempt of court, sentenced to six months’ imprisonment and barred for a year from practising as an arbitrator.

That conviction was upheld on appeal, and in October 2025 the Spanish Supreme Court dismissed his final challenge, bringing the criminal proceedings to a definitive close. The award was not merely without legal foundation; it was the product of conduct a criminal court found unlawful.

While the annulment proceedings ran their course, the claimants tried to give the award teeth by seizing assets connected to Malaysia abroad — in Luxembourg, in the Netherlands and in France, where they went so far as to target Malaysian diplomatic property.

None resulted in any recovery. In the Netherlands, the challenge went all the way to the Supreme Court, which in September 2024 dismissed the claimants’ appeal in a final and binding ruling and ordered them to pay costs, bringing the enforcement proceedings there to an end. Across the jurisdictions in which enforcement was attempted, measures were refused, lifted, withdrawn or stayed, and no recovery was made against Malaysia.

None of this was inevitable, and none of it happened by itself. Defeating a claim of this scale required a sustained, coordinated effort across several years and four foreign jurisdictions — Spain, France, the Netherlands and Luxembourg — against well-resourced opponents.

That effort was ultimately coordinated through the War Room of the Special Secretariat on the Sulu Case, under the minister in the Prime Minister’s Department (Law and Institutional Reform), with the Attorney-General’s Chambers, Wisma Putra, the Legal Affairs Division of the Prime Minister’s Department and other agencies, as part of the government’s sustained response under Prime Minister Datuk Seri Anwar Ibrahim.

It was, in the truest sense, a national effort, and the Malaysian Bar, in welcoming the outcome, recognised it as such.

Nor was Malaysia’s response confined to the courtroom. Drawing on the lessons of the Sulu claim, parliament enacted the Arbitration (Amendment) Act 2024, in force since Jan 1, 2026, which, for the first time, brings third-party funding of arbitration within a clear statutory framework — permitting such funding, but requiring that the existence of any funding arrangement, and the identity of the funder, be disclosed — so that arrangements of the kind that supported this claim now operate in the open.

Why should this matter to Malaysians who will never read a French judgment? Three things.

First, sovereignty. The claim was, at its core, an attempt to reopen through a private arbitration a question of territorial sovereignty long since settled: Sabah is, and remains, part of Malaysia. That a colonial-era payment arrangement could be turned into a multi-billion-dollar lever against the nation was an affront to that sovereignty.

Its comprehensive defeat affirms that Malaysia’s territorial integrity is not for sale, and cannot be litigated away in a foreign forum to which the nation never submitted.

Second, the integrity of arbitration itself. International arbitration is a system Malaysia relies upon and supports; it underpins the cross-border commerce on which the economy depends. The Sulu claim sought to weaponise that system against a state that had never agreed to it. That the system’s own courts, in France, the Netherlands and Spain, refused to countenance the abuse, and that the arbitrator was held criminally accountable, is not a defeat for arbitration but a vindication of it.

Third, the value of principled persistence. Malaysia prevailed not through political noise or retaliation, but through patient, disciplined legal work, jurisdiction by jurisdiction, over many years.

It demonstrates that the rule of law, properly resourced and consistently applied, remains the best defence of the national interest, and that some of the most important victories are won quietly, in courtrooms far from home, by people whose names most citizens will never know.

The Sulu claim is, for all practical purposes, at an end.

The award that once carried a US$15 billion figure has been annulled, its author convicted and its enforcement blocked at every turn, with Malaysia prevailing before the highest courts to consider the key issues arising from it.

That is not a lucky escape. It is a hard-won vindication of Malaysia’s sovereignty, and it certainly deserves to be understood as one.

Tan Sri Zainun Ali is a former judge of the Federal Court of Malaysia and pro-chancellor of Universiti Malaya. J J Chan is a barrister-at-law of the Honourable Society of Gray’s Inn, London, an advocate and solicitor of the High Court of Malaya, and an adjunct professor of the Faculty of Law, Universiti Malaya. He specialises in corporate and directors’ liability, insurance/reinsurance and medical negligence, and writes on constitutional and public-interest matters.

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