KUALA LUMPUR, April 6 — The Attorney General’s Chambers (AGC) today stressed that the government’s appeal in the Sabah revenue dispute does not challenge the state’s 40 per cent entitlement, after the Court of Appeal granted a stay pausing payment deadlines and negotiations tied to the long-running case.

In a statement today, the AGC said the stay “does not cover the High Court’s findings regarding the 40 per cent entitlement under Article 112C of the Federal Constitution”.

It added that “the appeal filed by the Federal Government is not against the 40 per cent formula itself”.

Instead, the AGC said the government’s challenge relates to aspects of the High Court’s decision involving constitutional interpretation and findings that both the federal and Sabah governments had abused their powers and breached constitutional obligations since 1974.

It said the stay would allow the appeal to proceed without the matter becoming “academic or futile”.

The clarification came after the Court of Appeal in Putrajaya allowed the federal government’s application to suspend the execution of a Kota Kinabalu High Court judgment pending appeal.

Delivering the ruling, judge Datuk Mohamed Zaini Mazlan said the government would “clearly be prejudiced” if compelled to comply with the order before its appeal is heard, citing the scale and timing of the obligations imposed.

“We also note that the court’s order not only directs negotiations, but also requires payment from the federal consolidated fund within 180 days of the High Court’s order,” he said.

Zaini warned that refusing the stay could carry wider fiscal risks, saying there would be “serious financial consequences for public funds if the application for a stay was rejected pending the appeal”, and noting that “the imposed timelines may not give the parties sufficient opportunity to determine the correct quantum payable”.

The High Court ruling, delivered on October 17, 2024, arose from a judicial review brought by the Sabah Law Society, which found Putrajaya had breached its constitutional duty by failing to review and pay Sabah its 40 per cent share of net federal revenue for the “lost years” from 1974 to 2021.

It ordered the federal government to work with the Sabah government to determine the amount owed, setting a three-month window for a review and a further six months — effectively fixing a mid-April deadline this year — to reach an agreement.

With the stay now in place, those timelines are suspended pending the outcome of the appeal.

Judges Datuk Ismail Brahim and K. Muniandy sat on the appellate panel, which made no order as to costs.