KUALA LUMPUR, June 28 — Malaysia's latest victory at the Hague Court of Appeal in the Netherlands will likely render futile any further illegitimate attempts by a group of purported Sulu claimants’ to recognise and enforce a purported arbitral award of US$14.9 billion (RM69.6 billion) against Malaysia.

Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said explained that the Dutch court's decision was unequivocally made based on three grounds.

"No Final Award could have been lawfully rendered due to the annulment of Gonzalo Stampa's appointment as arbitrator by the same Spanish court that appointed him, which in turn invalidated all of his procedural acts.

"Thus no arbitral award exists that could be capable of recognition and enforcement.

"The arbitral tribunal was moreover not properly constituted since the appointment of Stampa was annulled, which leads to the rejection of the claimants' request,” she said in a statement this morning.

A court in Madrid, Spain had in March 2019 appointed Stampa to be the arbitrator for the Sulu claimants' case, but the same Spanish court later in June 2021 annulled or cancelled his appointment as arbitrator.

Despite Spain cancelling his appointment as an arbitrator for the case, Stampa transferred the entire arbitration to France and decided to continue the arbitration before awarding US$14.9 billion to the Sulu claimants on February 28, 2022.

The second ground, Azalina explained, was that no valid arbitration agreement exists, thus no arbitration procedure could have legally taken place to begin with.

"It cannot be established that the parties intended to settle disputes by arbitration; even if they did, the alleged clause referred to by the claimants is, in any event, dysfunctional and cannot be relied upon,” she said.

Thirdly, Azalina said the exceptional stay of enforcement of the purported Final Award in Paris was a further ground for refusal which renders the sham award incapable of recognition and enforcement in the Netherlands.

On June 6, the Paris Court of Appeal recognised that there was no commercial arbitration clause in the 1878 agreement — between the then Sulu sultan and a British company’s representatives — to enable arbitration in the Sulu claimants’ case.

Azalina said the decision affirmed Malaysia's position that the sham arbitration should never have taken place and that the entirety of the purported Final Award is null and void.

"The landmark judgment will likely render futile any further illegitimate attempts by the Claimants and their funders to enforce it in other jurisdictions.

"The Hague Court of Appeal’s decision signifies Malaysia’s achievement in its ongoing legal challenge to deprive the enforcement of the purported awards globally, which is a threat to the entire international arbitration system,” she said.

She also assured that the Malaysian government has taken the necessary steps to obtain payment of the cost ordered against the Claimants, following the Paris Court of Appeal’s June 6 decision.

The Sulu claimants had previously made attempts to seize assets belonging to Malaysia or Malaysian entities in Luxembourg, France and the Netherlands to enforce the US$14.92 billion arbitration award, but Malaysia has been fighting such efforts through the courts.

Previously, eight citizens of the Philippines, who claimed to be heirs of the defunct Sulu sultanate, had filed for arbitration proceedings to seek billions of US dollars from Malaysia over Sabah.