27-6-2023 (THE HAGUE) A Dutch court of appeal has rejected a bid by eight descendants of a former sultanate to enforce a US$15 billion arbitration award against the Malaysian government. The decision was celebrated by Malaysia as a “landmark victory”.
Prime Minister Anwar Ibrahim expressed confidence, stating that the government was now “closer than ever to completely nullifying” the award in question.
In a statement, Anwar said, “Malaysia trusts that today’s decision… will put an end to the frivolous attempts of the claimants to enforce the purported final award in other jurisdictions.”
Last year, a Paris arbitration court ruled in favor of the Filipino heirs of the last sultan of Sulu, awarding them US$14.9 billion in a long-standing dispute with Malaysia over a land deal from the colonial era.
Since then, the heirs have sought to seize Malaysian government assets in France, Luxembourg, and the Netherlands in an effort to enforce the award.
Malaysia, which did not participate in the arbitration process, considers it to be illegal. The country obtained a stay on the award in France, but the ruling remains enforceable in foreign jurisdictions under a UN treaty on arbitration.
In September, the heirs sought permission from a Dutch court to enforce the award in the Netherlands. However, Dutch judges ruled in favor of Malaysia, stating that the original agreement lacked a clause that binds parties to arbitration. Additionally, the French stay meant that the claim could not be enforced in the Netherlands, according to the court’s website.
“The court dismisses the requests of the Filipino nationals” to execute the arbitration award, stated the judgment.
Lawyers representing the claimants have not immediately responded to requests for comment.
The dispute originates from a 1878 agreement between European colonists and the Sultan of Sulu, regarding the use of his territory, which encompassed parts of the southern Philippines and present-day Malaysia on the island of Borneo.
Following the agreement, independent Malaysia made annual token payments to the sultan’s heirs as a sign of honoring the deal. However, payments were halted in 2013 when supporters of the former sultanate launched a violent incursion to reclaim land from Malaysia.
The heirs claim that they were not involved in the incursion and pursued arbitration due to the suspension of payments.
Earlier this month, a Paris court upheld the Malaysian government’s challenge against enforcing a partial award to the heirs. Malaysia interpreted the decision as an indication that the final arbitration award would be annulled.
