Dispute’s  crux

Instead of going after the messenger and the judge, Malaysia should negotiate with the aggrieved party who are the members of the Sulu Sultanate.

By TDT

July 31, 2022

Sultan Muedzul Lail Tan Kiram’s Royal House of Sulu has sought the support of the administration of President Ferdinand “Bongbong” Marcos Jr. in negotiations that should be held soon with Malaysia to settle the Sabah claim, which was the subject of the recent $14.9 billion award.

Malaysian authorities, however, appear determined to follow a different legal track.

Citing abuse of the global arbitration process, Malaysian political figures are now going after the lawyer and the judge who rendered the French court’s decision to compensate the Sulu Sultanate $14.9 billion over the dispute with Malaysia on the 1878 lease contract on Sabah.

The Kuala Lumpur officials are blaming both lawyer Paul Cohen and Spanish arbitrator Gonzalo Stampa for the trouble that Malaysia is now in after the seizure of $2 billion worth of assets of state-owned oil giant Petronas based on the arbitration award.

Last February, Stampa, in a decision announced in a French court, awarded to the Sultanate $14.92 billion, which included interests and costs of litigation.

Malaysia, which made a stand that it will not recognize the process, then sought to stop the arbitration within its borders. It obtained an injunction at the Kota Kinabalu High Court on March 2020 before the preliminary award was issued.

The Kota Kinabalu court ruled that as the 1878 agreement did not mention anything about arbitration, the Sabah court was the correct venue to settle the matter.

Outside of Malaysia, the arbitration continued, and it was in June 2021 that Malaysia moved to vacate all rulings from the Madrid superior court.

The Spanish superior court allowed Malaysia’s petition, but Stampa went against the order, as he ruled that such intervention was not allowed by the Spanish Arbitration Act.

The Sulu claimants then applied ex-parte to have the proceedings resumed in Paris in October 2021 as it was sanctioned by the French courts.

The proceedings continued, but in December 2021, Malaysia sought a stay order from the Paris Court of Appeal.

The Paris tribunal suspended the confirmation order and Malaysia sent the decision to Stampa requesting that proceedings be discontinued, but he did not heed the request.

In February this year, Malaysia went ahead with criminal proceedings against Stampa for not abiding by the June 2021 Madrid decision and again requested that proceedings be halted.

Again, Stampa ignored the request and proceeded to issue the final award on 28 February this year.

In May, Foreign Minister Datuk Saifuddin Abdullah issued diplomatic notes to the 168 countries that are signatories of the New York convention, informing them of Malaysia’s intention to strike out the final award.

The former attorney general, Tan Sri Tommy Thomas, castigated Cohen in a letter for rejecting Malaysia’s offer to settle arrears and interest totaling 48,230 Malaysia ringgit, which he claimed was all what his government should pay the Sultanate based on the 5,000 Malaysian ringgit provided under the 1878 lease agreement between the Sultanate and the United Kingdom-backed British North Borneo Co.

Cohen, in reply to Thomas’ assertion, cited “the issue of the unconscionable imbalance between the annual payment amount and the actual value of the territory, in light of the unanticipated discovery and development of certain substantial natural resources (hydrocarbons, crops and others).”

Instead of going after the messenger and the judge, Malaysia should negotiate with the aggrieved party who are the members of the Sulu Sultanate who, in turn, the Philippine government must support.


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