KL’s Dutch assets next Sultanate target

Lawyers of the heirs of the Sulu Sultanate have targeted Malaysian assets in The Netherlands for seizure as part of the enforcement of the $14.9 billion arbitration award as a result of the Sabah dispute.

The counsels of the heirs sought the Dutch court's permission to seize the assets, a lawyer said.

Malaysia said it does not recognize the heirs' claim and did not immediately respond to a request for comment on the Dutch petition.

A French arbitration court in February ordered Malaysia to pay the second-largest arbitration award on record but Malaysia obtained a stay on the ruling pending an appeal.

The award, however, remains enforceable outside France under a United Nations treaty on international arbitration.

The Sultanate, which once controlled a territory spanning rainforest-covered islands in Sulu and parts of Borneo island, asked the Dutch court to recognize and enforce the arbitration award.

The heirs wish to take "recourse against assets of Malaysia, which are located in The Netherlands," according to a copy of the court petition shared by their lawyer.

More to come

"This filing in The Netherlands will soon be followed by other enforcement actions, of varying types, in multiple jurisdictions," lawyer Paul Cohen, a lead co-counsel for the sultan's heirs from British law firm 4-5 Gray's Inn Square, said.

Some of Malaysia's biggest companies have operations in the Netherlands, including state oil firm Petronas and palm oil producer Sime Darby Plantations.

In July, two Luxembourg-based subsidiaries of Petronas were seized by court bailiffs as part of the heirs' effort to claim the award.

Petronas, which has described the Luxembourg seizure as "baseless," has said it would take legal measures to stave off future seizure attempts in 44 countries where it had assets and limit the company's funds kept abroad.

The dispute involved a deal signed in 1878 between two representatives of the British Crown and the sultan for the use of his territory in present-day Sabah, an agreement that independent Malaysia honored until 2013, paying the monarch's descendants about 5,300 Malaysian ringgit or $1,000 a year.

Kuala Lumpur stopped the payments after a bloody incursion by supporters of the former sultanate to reclaim the disputed territory.

The heirs went to an arbitration court over the suspension of payments. Malaysia did not participate in nor recognized the arbitration.

An official of the Sultanate confirmed to the Daily Tribune more assets will be targeted for seizure in other countries that are signatories of the United Nations New York Convention.
"The Sultanate welcomes the legal action in The Netherlands," the official said.

With some exceptions, such as diplomatic premises, any Malaysian government-owned asset within nations party to the UN convention is eligible for the purposes of enforcing the award, said Elisabeth Mason, another lawyer for the heirs.

Malaysia and The Netherlands were both signatories of the convention on the recognition and enforcement of foreign arbitral awards commonly known as the New York Convention adopted by the United Nations on 10 June 1958.

At least 1,700 cases were decided by arbitration in 170 members countries, including and no less than the US Supreme court ruled that the New York Convention does not conflict with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by non-signatories.