KOTA KINABALU, March 2 — Malaysia is legally obliged to pay up to US$14.9 billion (RM62.6 billion) to the descendents of the defunct Sulu sultanate for violation of a land lease agreement in 1878 awarded by a French arbitration court yesterday, according to Sabah Law Society president Roger Chin.
He explained that this is because Malaysia is a member of the New York Convention, The Star reported today.
However, Chin also said Malaysia can apply to set aside the award decision but has to do it in France where the arbitration court is based.
“As Malaysia is a member of the New York Convention, it is obliged to enforce the award but has the option of making an application to set the award aside in France, where the award was rendered.
“If Malaysia refuses to make payment, the claimants will have the right under the New York Convention to enforce the award against Malaysian state assets in any of the 167 signatory state parties around the world,” he was quoted saying.
Chin noted that the ruling made by the French arbitration court yesterday was contradictory to the 2020 decision made in the High Court Kota Kinabalu, adding that it remains to be seen which of the two decisions would be enforceable internationally.
Chin explained that the 2020 court ruling, known as the Malaysian government vs Nurhima Kiram Fornan & Ors, began when the federal government initiated legal action against the claimants to stop them from proceeding with arbitration.
The High Court ruled in favour of the Malaysian government in its suit against eight of the supposed descendants of the Sultan of Sulu and said there was no binding agreement between Malaysia and the sultan’s heirs that compelled either party to submit to arbitration in the event of a dispute.
Chin said the Malaysian government had also sought a declaration, among others, that there was no arbitration agreement between the parties; and that Malaysia was the proper forum to resolve the dispute over territorial rights arising from the deed of cession.
While Malaysia did not appear at the Paris arbitration proceedings, he said unlike the Malaysian court where default judgments can be issued, it is not possible to issue a default award in international arbitration.
Chin said it would be interesting which courts’ ruling will be carried out.
“Foreign courts are generally thought to be likely to have to give more weight and priority to tested conclusions contained in international arbitration awards rather than to untested conclusions contained in default court judgments.
“This will be an interesting situation and it remains to be seen if foreign courts will give more priority to the New York Convention than to bilateral treaties in respect of reciprocal enforcement of court judgments,” he was quoted saying.
It was reported yesterday that an arbitration court in France ordered Malaysia to pay US$14.9 billion to the descendants of the Sulu sultan which was said to be based on the alleged violation of payments of cession money under a 1878 agreement signed by Sultan Jamal Al Alam, among others.
According to the online news reports, Malaysia had stopped paying the heirs to the Sultan Sulu their annual RM5,300 cession money since the 2013 Lahad Datu armed incursion.
Spanish news website La Información reported that Spanish arbitrator Gonzolo Stampa had issued the award in a Paris court and stated that the 1878 treaty was an “international private lease agreement” of a commercial nature.
By not paying the cession money since 2013, Stampa said Malaysia had breached the agreement and would have three months to pay up, failing which interest would be charged.
