Malaysia wins again as French court junks Sulu claimants' US$14.9b award, govt says this ends ‘extortion’ bid

KUALA LUMPUR, Dec 10 — Malaysia has recorded another court victory in its long-running dispute with the purported heirs of the defunct Sulu sultanate, following a fresh ruling that nullifies their US$14.9 billion (about RM66.4 billion) claim against the country.

The Malaysian government’s Sulu Special Secretariat War Room announced that the Paris Court of Appeal had yesterday fully annulled or cancelled an arbitrator’s order directing Malaysia to pay the US$14.9 billion amount.

“Malaysia trusts that this victory will put an end to all the baseless attempts from the so-called Sulu claimants (and their litigation funder, Therium) to extort money and assets from the people of Malaysia,” the secretariat said in a statement today.

“In any event, Malaysia stands ready to continue its fight before any court called upon by the so-called Sulu claimants,” it added.

In its judgment yesterday, the Paris Court of Appeal confirmed that the arbitrator lacked the jurisdiction or authority to issue the US$14.9 billion award, as there was no valid arbitration agreement binding Malaysia.

According to the secretariat’s statement, the Paris Court of Appeal also ordered the claimants to pay €200,000 (about RM957,000) in legal costs to Malaysia.

Previously, eight citizens of the Philippines who claimed to be heirs of the defunct Sultanate of Sulu initiated arbitration proceedings. They sought billions of US dollars in compensation from Malaysia over Sabah, based on a colonial-era agreement.

The Sulu claimants argued that an 1878 deal saw the Sulu sultanate “lease” Sabah to a British company in return for annual payments, while Malaysia says the deal saw the sultanate agreeing to “grant and cede” or give up all its rights and powers over Sabah in exchange for the payments.

Although a Spanish court had initially appointed and later revoked Gonzalo Stampa as arbitrator, he proceeded to issue two decisions.

On May 25, 2020, Stampa issued a “partial award,” declaring he had jurisdiction to be the arbitrator for the case. He then moved the case to France.

On February 28, 2022, he issued a “final award”, ordering Malaysia to pay US$14.9 billion to the Sulu claimants.

Two French courts had previously rejected the partial award, finding that Stampa had no valid basis to assume jurisdiction.

On June 6, 2023, the Paris Court of Appeal refused to recognise or enforce the partial award on the grounds that no valid arbitration agreement existed to bind Malaysia.

The French Supreme Court subsequently dismissed the claimants’ challenge to that ruling on November 6, 2024.

More information on the Malaysian government’s timeline of key events in the Sulu case, including efforts to cancel and block enforcement of the US$14.9 billion award, is available here.