Malaysia wins appeal against partial award in $15 billion claim by sultan heirs

A Paris court has upheld the Malaysian government's challenge against enforcing a partial award to the heirs of a former sultan who won $15 billion in an arbitration over a colonial-era land deal, Malaysia said late on Tuesday (6 June).

The win for Malaysia implies the final award will be annulled and the descendants' efforts to seize Malaysian assets will end, the government said.

"This decision, which is final and binding, is a decisive victory for Malaysia in its ongoing pursuit of legal remedies, which Malaysia is confident will result in comprehensive defeat for the claimants and their funders," said Law Minister Azalina Othman Said.

The claimants said they would consider their options before the French Supreme Court.

The Filipino heirs of the last Sultan of Sulu won a $14.9-billion award in a French arbitration court last year in a long-running dispute over the deal after a partial award was first issued in May 2020.

The Paris Court of Appeal found the case arbitrator had wrongly upheld his jurisdiction, Malaysia said on Tuesday.

Malaysia, which did not participate in the arbitration, maintains the process is illegal and has vowed to use all legal measures to prevent seizure. It obtained a stay on the award in France but the ruling remains enforceable overseas under a United Nations treaty on arbitration.

The dispute stems from an 1878 deal signed between European colonists and the Sultan of Sulu for the use of his territory, which spanned islands in the southern Philippines and parts of present-day Malaysia on Borneo island.

Independent Malaysia paid a token sum annually to the sultan's heirs to honour the agreement but stopped in 2013 after supporters of the former sultanate launched a bloody incursion to reclaim land from Malaysia. The heirs say they were not involved in the incursion and sought arbitration over the suspension of payments.

In recent months, Malaysia has stepped up efforts to protect itself from the arbitration award, including filing police complaints against one of the claimants' lawyers.

The Filipino claimants and their lawyers have requested protection from their respective foreign ministries over concerns that there could be further actions against them, they said.