KAJANG, July 19 — Legal counsels hired by heirs of the now-defunct Sulu Sultanate had sought to secure arbitration rulings against Malaysia in Spain and France as both nations possessed established laws that are deemed “arbitration-friendly”, Universiti Teknologi Mara (UiTM) law professor Datuk Rahmat Mohamad claimed today.
Describing the legal bid by the purported heirs as an “ambush”, Rahmat went as far as to note the “shrewdness” of the so-called heir’s legal counsel in opting to pursue arbitration ruling overseas launched in 2017 by the heirs to receive compensation over land in Sabah which they claimed their ancestors had leased to a British trading company in 1878.
“That is an ambush. We had not expected this [surprise] to take place. This is unprecedented in the history of the 1958 New York Convention,” he told a roundtable discussion on the matter held at the National Professors Council (MPN) here.
Commonly known as the 1958 New York Convention, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards governs the recognition and enforcement of arbitral awards where both Malaysia and Spain are parties to the treaty.
Under the convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting states, subjected to limited defences.
“See how astute the so-called heirs’ counsel to seek an arbitration award in Spain. In fact, there is a reason why they sought rulings in Spain and France. It’s simple, those are arbitration-friendly countries,” he said.
He then cited how arbitration awards issued in Spain are directly enforceable in similar terms as enforcement of a court judgement pursuant to Spanish Arbitration Law, an oversight by the Malaysian government which has undoubtedly backfired in the ongoing dispute.
“There exist different jurisdictions and differing law systems which are not easily comprehended by most local legal practitioners here,” Rahmat added.
Under the Spanish Arbitration Law, a decision recognising an arbitral award in Spain is final (Final Award) and is not eligible for appeal by contesting the merits of the dispute settled by the arbitrator.
However, an arbitral award may be set aside on limited grounds.
The Final Award over the ongoing dispute was issued by Spanish arbiter Dr Gonzalo Stampa in February, following claims by parties that alleged to be heirs or successors-in-interest to Sultan Jamalul Kiram II.
Accordingly, Malaysia did not make its representation known during the arbitration process, only taking an objection stance after the ruling was made, arguing that a notice was not served.
It was for this reason, Rahmat claimed that Malaysia failed to challenge the arbitrator’s authority, leading to the so-called heirs having the necessary validation to enforce a seizure order on any Malaysian assets overseas.
Subsequent to the issuing of the Final Award, a French court later ordered Malaysia to pay the heirs up to US$14.92 billion (RM62 billion) for violating a land lease made in 1878 between the Sultan of Sulu at the time Sultan Mohamet Jamal Al Alam and Baron de Overbeck and Alfred Dent where the former granted and ceded sovereign rights over certain territories located in North Borneo.
As a token, RM5,300 per year was to be paid to the then Sultan of Sulu, his heirs or successors. However, Malaysia stopped paying after the Lahad Datu armed invasion in 2013.
On July 13, de facto law minister Datuk Seri Wan Junaidi Tuanku Jaafar was quoted as saying that the Paris Court of Appeal had granted leave to Putrajaya’s application to suspend the arbitration ruling which declared the Malaysian government was liable to a billion ringgit settlement claimed by the so-called Sulu sultanate heirs.
This meant the previous ruling obtained in Spain cannot be enforced in any country until an ultimatum is reached in Paris, after authorities in Luxembourg reportedly seized the assets of two Petronas subsidiaries claimed by the heirs.
The Malaysian government had filed for Stampa’s removal as the arbitrator by the Madrid High Court in June last year. Stampa was eventually declared ineligible and Putrajaya has used the verdict as the basis to reject and dismiss the validity of the Final Award.
Apart from the standing issue, Rahmat also called into question the purported funding made by the so-called heirs over the legal fees and their mysterious benefactors.
Rahmat, who is also the new chairman of the Human Rights Commission of Malaysia (Suhakam), then warned that if Malaysia failed to set aside the Final Award, the Sabah territorial dispute between Malaysia and the Philippines may become a reality.
“At the moment, the claims by the island republic is an effective recurring strategy used by Philippines politicians to gain political mileage even though it has no legal and factual basis,” he said.
Separately, MPN president Datuk Raduan Che Rose said all that was raised during today’s roundtable discussion will be carried forward to the Prime Minister’s Department for further deliberation in the matter.
Raduan, as MPN representative, said the body was taking the initiative to conduct academic discourse amongst its members to assist the Malaysian government in sharing its input on scholarly matters relating to the ongoing arbitration dispute.
