KUALA LUMPUR: Malaysia will be scrambling to protect the assets as the descendants of the last sultan of the remote Filipino region of Sulu look to enforce an US$15 billion settlement award in an argument over a colonial-era land deal.
In 1878, two European colonists authorized a deal with the particular sultan for the use of his area in present-day Malaysia – an agreement that will independent Malaysia honoured until 2013, spending the monarch’s descendants about US$1, 000 a year.
Now, 144 years afterwards after the original deal, Malaysia is for the hook for the 2nd largest arbitration honor on record for stopping the payments after a bloody incursion by supporters associated with Sultan Mohammed Jamalul Alam’s heirs in which more than 50 people were killed.
“It is a fascinating and unusual case, inch said lawyer Paul Cohen, a business lead co-counsel for the sultan’s heirs from British law firm 4-5 Gray’s Inn Square.
For years, Malaysia mostly dismissed the claims but in July, 2 Luxembourg-based subsidiaries of state energy firm Petronas were served with a seizure notice to enforce the award that the heirs won in Feb.
The settlement ruling in Italy followed an eight-year legal effort by heirs and US$20 million in money raised for them through unidentified third-party traders, according to interviews along with main figures in case and legal documents seen by Reuters.
Malaysia did not participate in nor identify the arbitration : allowing the heirs to present their situation without rebuttal – despite warnings that it would be dangerous to ignore the process.
The claimants, which includes some retirees, are Filipino citizens leading middle-class lives, the far cry from their royal ancestors from the Sulu sultanate that will once spanned rainforest-covered islands in the southern Philippines and areas of Borneo island.
The heirs believe the 19th millennium deal was an industrial lease, which is why these people chose arbitration. They also claimed compensation for your vast energy supplies that have since been discovered in the area they gave up in Malaysia’s Sabah state on Borneo.
Malaysia disputes that, saying the sultanate ceded sovereignty and the arbitration was bogus.
“The arbitration is a sophisticated fictional, veiled as a legal process, ” Uria Menendez, a The spanish language law firm representing Malaysia, told Reuters.
Malaysia has obtained a stay in Italy pending an attractiveness – a process which could take years – but the award remains enforceable globally within UN convention upon arbitration.
“POOREST SULTAN”
Malaysia honoured the colonial-era deal until 2013, when supporters of the late Jamalul Kiram III, who claimed to be the rightful sultan of Sulu, attempted to reclaim Sabah.
Clashes erupted whenever about 200 supporters arrived in boats from the Philippines and survived nearly a month.
Kiram, who stated to be the “poorest sultan in the world”, was not one of the court-recognised heirs who received payments from Malaysia.
The eight claimants in the arbitration – including Kiram’s daughter and cousins : who received the annual payment have condemned the assault.
Up until the particular intrusion, the Malaysian embassy in Manila wrote a check to the claimants each year for “cession money”, according to cheques and correspondence from the charge to the heirs and shared with Reuters with the heirs’ lawyers.
Malaysia’s then-prime minister, Najib Razak, told Reuters he had stopped the obligations due to public fury over the incursion, recognizing the reason publicly initially.
“I felt it was incumbent upon my duty and responsibility to shield the sovereignty of Sabah and the people of Sabah, inch he said, incorporating he had not expected retaliatory legal actions.
The particular claimants, through their own lawyers, declined to be interviewed.
Cohen, the particular heirs’ lawyer, first heard of their promises from an oil and gas expert he cross examined in 2014 in an unrelated case.
Knowing they did not have the economic means, Cohen within 2016 brought on table Therium, an Uk firm that has bankrolled legal actions by raising money from institutional investors, which includes a sovereign prosperity fund.
Therium conducted nine rounds of funding for your case, during which third-party investors repeatedly evaluated its merits, stated Elisabeth Mason, a lead co-counsel for the claimants with 4-5 Gray’s Inn Square.
The case offers cost over US$20 million, including lawyers and researchers within eight jurisdictions, the lady said.
“Investors don’t invest lightly in such matters, inch she said.
Therium said it would continue to finance attempts to enforce the particular award. It dropped to provide details.
“LUDICROUS”
The heirs notified their particular intention to begin arbitration in 2017 in Spain and initially sought US$32. 2 billion in compensation, according to the award statement.
Malaysia’s first response came in 2019 when then-attorney general Tommy Thomas offered to resume the yearly payments and pay out 48, 000 ringgit (US$10, 800) in arrears and curiosity if the arbitration was dropped.
Thomas believed the particular demands were “absurd and ludicrous” but made the offer after colleagues advised him that it was “perilous” to disregard the settlement as Malaysia’s foreign assets could be at risk, he wrote in the 2021 memoir.
The particular heirs rejected Thomas’ offer and the settlement went on without Malaysia’s participation.
Malaysia successfully challenged the appointment associated with Gonzalo Stampa since the sole arbitrator in the Spanish court a year ago.
But Stampa argued in his honor statement that the legal courts did not have legislation over arbitration, and moved the case to France to deliver the award – actions that Malaysia says were unlawful.
Stampa is now facing criminal proceedings vacation following a complaint filed by Malaysia. He declined to comment to Reuters.
By snubbing the arbitration, Malaysia is usually confined to quarrelling the procedural validity rather than making a situation against the heirs’ promises, said N Jansen Calamita, head associated with Investment Law and Policy at the Nationwide University of Singapore.
“It was a risky strategy and ultimately, I don’t think it has served them properly, ” he said.