MARCH 7 — Following news that a French arbitration court has ordered Malaysia to pay the descendants of the Sultan of Sulu US$14.92 billion (RM62 billion), references have been made to a decision of the Sabah High Court sitting at Kota Kinabalu which ruled that Malaysia was the proper venue to resolve disputes arising from the 1878 Deed of Cession and not the Spanish courts.
The following background facts appear in the judgement of High Court judge, Justice Mairin Bin Idang @ Martin in that case, namely Government of Malaysia v Nurhima Kiram Fornan & Ors [2020] MLJU 425. They highlight the abuse of the legal processes.
(a) The 1st to 8th Defendants (the heirs of the Sultan of Sulu) have commenced an arbitration proceeding in Spain (the Spanish Arbitration) pursuant to the Deed of Cession, signed between the Sultan of Sulu and Baron Gustavus de Overbeck and Alfred Dent of the North Borneo Company in 1878, which in present day is binding upon the heirs of the Sultan of Sulu, and the Sovereign State of Malaysia;
(b) The heirs of the Sultan of Sulu had in 1939 submitted to the jurisdiction of the High Court of the State of North Borneo – now the High Court of Sabah and Sarawak – in respect of a dispute under the Deed of Cession, where judgment was delivered by Chief Justice Macaskie in Civil Suit No. 169/39 in favour of the said heirs;
(c) Despite the absence of any, or any valid or binding agreement between the parties to the Deed of Cession to refer disputes thereunder to arbitration, and despite the submission by the heirs of the Sultan of Sulu to the High Court of Sabah and Sarawak, the Superior Court of Justice in Madrid was moved by the 1st to 8th Defendants to appoint a sole arbitrator in the Spanish Arbitration without regard, inter alia, to established conflict of laws and forum selection rules, and in violation of the Sovereign Immunity of Malaysia;
(d) Further, the appointment of the 9th Defendant, Dr Gonzalo Stampa, as sole arbitrator in the Spanish Arbitration is null and void for procedural defects and substantive lack of jurisdiction in the proceedings in the Superior Court of Justice in Madrid, and consequent to this and the earlier cited grounds, the 9th Defendant has no jurisdiction over the Sovereign State of Malaysia; and
(e) The commencement and prosecution of the Spanish Arbitration by the heirs of the Sultan of Sulu are accordingly oppressive and vexatious, and carried on in violation of the legal and sovereign rights of Malaysia.
In such circumstances, it was proper for the High Court, as the natural forum for any disputes arising from the Deed of Cession, to enjoin the Defendants – that is, the heirs and the sole arbitrator – from proceeding with the Spanish Arbitration.
Importantly the High Court held that there was no valid or binding arbitration agreement. Justice Mairin said:
“There is also no provision to show that arbitration is the exclusive forum in which disputes between parties are to be resolved. The Deed of Cession is silent as to the specific dispute to be referred to arbitration, the seat of arbitration and appointment of arbitrators.
“These are among the requirements needed to indicate parties’ submission to arbitration. Absence of which I found no valid legal basis for the Defendants to be referring dispute arising from the Deed of Cession to the Spanish arbitration.”
A provision in the Deed does make reference for any dispute to be brought for consideration to Her Britannic Majesty’s Consul-General for Borneo. Even if this is a reference for dispute to be referred to arbitration, the provision is inoperative and incapable of being performed as the position of Her Britannic Majesty’s Consul-General for Borneo no longer exists.
The learned High Court judge said:
“The absence of such designation today is also acknowledged by the 1st to 8th Defendants in their Notice of Arbitration dated 30th July 2019 submitted to the Spanish Arbitration. It was due to such absence that prompted them to request for the appointment of an appropriate person or persons by the British Government to fulfil the Consul-General’s role in determining the alleged dispute laid before the Spanish Arbitration.
“Nevertheless, the UK Foreign & Commonwealth Office on behalf of the British Government in a letter dated 8th December 2017 declined such request on various grounds, inter alia, the unclear identity of the 1st to 8th Defendants beyond the description provided by them in their letter to the Office, and the unclear position of the Deed of Cession and the rights or claims of the 1st to 8th Defendants may have under such Deed of Cession after the dissolution of the Colony of North Borneo in 1963.
“The Office also suggested that the 1st to 8th Defendants should take up their claim directly to the Government of Malaysia, which to date, they have refused to do so.”
Yet the heirs of the Sultan of Sulu persisted with the Spanish Arbitration.
In his judgment, Justice Mairin also noted that the Malaysian government was advised by its Spanish counsel that Spain recognised the doctrine of Sovereign Immunity, unless the sovereign state waived its immunity by submitting to either arbitration or judicial proceedings, which the Malaysian government did not.
Accordingly, the Malaysian government could not be forced to submit to the jurisdiction of the sole arbitrator, Dr Stampa. The latter had no jurisdiction to deal with the alleged dispute.
The heirs flew over 10,000 kilometres to Madrid in Spain to move the Superior Court of Justice there to appoint a sole arbitrator in the Spanish Arbitration. Then they hopped to France for a so-called arbitration proceeding.
They were forum shopping. This was not lost on Justice Mairin who duly noted as follows:
“The 1st to 8th Defendants have clearly engaged in forum shopping when they unilaterally decided Spain to be the forum for the appointment of the sole arbitrator, seat of arbitration, and supervisory Court in this case. No regard whatsoever has been made to the well-established rules on conflict of laws and forum selection in making such decision.”
The term is said to have been introduced into English law by Lord Pearson in the classical case of Boys v Chaplin [1971] AC 356. His Lordship defined it as “a plaintiff by-passing his natural forum and bringing his action in some alien forum which would give him relief or benefits which would not be available to him in his natural forum.”
Black’s Law Dictionary defines forum shopping as a litigant’s attempt “to have his action tried in a particular court or jurisdiction where he feels he will receive the most favorable judgment or verdict.”
The High Court of Sabah and Sarawak is the natural and proper forum to determine the dispute.
There is no nexus between Spain and the Deed of Cession which is the raison d’etre of the dispute, nor is Spain remotely connected to the parties to the dispute.
The Madrid Protocol of 1885 (the Protocol) which resulted in the renunciation by the Spanish Government of all claims of sovereignty over the territories in the then State of North Borneo – now Sabah – affirms the position of the British Government over North Borneo and any Spanish claim to sovereignty over it is void.
As such, the Protocol has severed any connection Spain has over the dispute as well as the parties to the dispute. Due to such lack of nexus, Spain could not be the natural and proper forum to be hearing this matter.
Forum shopping has been disapproved by the courts. Lord Pearson referred to the “danger” of forum shopping. Another famous English judge, Lord Reid, regarded the practice as undesirable (The Atlantic Star [1974] AC 436).
It is undesirable as it involves, among others, more expense and inconvenience to the parties; it can also lead to two conflicting judgments, as the case is with the heirs to the Sultan of Sulu’s dispute with the Malaysian government.
The most famous of English judges, Lord Denning, likened a litigant who forum shopped to a “moth drawn to a light”. (see Smith Kline & French Lab’ys Ltd. v. Bloch [1983] 1 WLR 730, 733 AC).
The American legal system is also said to tend to treat forum shopping as unethical and inefficient. Litigants who forum shop are accused of abusing the adversary system and squandering judicial resources. (see “Forum Shopping Reconsidered” (1990) 103 Harvard Law Review 1677)
Huang Min (in her personal capacity as the mother of the deceased, Zhang Meng and for the benefit of the deceased’s family as defined under the Carriage by Air Act 1974) & Ors v Malaysian Airline System Bhd & Ors [2018] 2 MLJ 450
At home, Judicial Commissioner Awg Armadajaya, in a recent case, has expressed his view that forum shopping is “an abuse of process and is not permitted. Abuse of process, by definition, is when a litigant uses the legal system by illegal, malicious, or perverted means.” (see Multiglow Corporation Sdn Bhd & Anor v SCG Consultants Sdn Bhd [2020] MLJU 1221)
The learned judge explains that the focus of the doctrine is on protecting the integrity of the judicial process. One may add the avoidance of the harassment of the defendant. (See Leisure Farm Corporation Sdn Bhd v Kabushiki Kaisha Ngu (formerly known as Dai-Ichi Shokai) & Ors [2017] MLJU 506)
That is why there are a couple of other objections against forum shopping, briefly:
(a) Unfairness to the defendant. The burden on a defendant is greatly increased when trial is held in an alien forum. The inconvenience to the defendant of trial in an alien forum may be so great as to make it difficult for him to put up an adequate defence.
(b) Public interest. The Supreme Court of the United States has said that a court has an interest in not being clogged with foreign actions which would lead to administrative difficulties. Also, the court has an interest in not trying actions which could be tried more appropriately elsewhere, because, for example, the case involves application of foreign law and it is much more likely to misapply the foreign law. (see J J Fawcett “Forum Shopping - Some Questions Answered” (1984) 35 N Ir Legal Q 141
Litigants should not bypass the natural forum – the most obvious and appropriate forum – and bring their action in an inappropriate forum.
If they do that, their action in the alien or foreign court becomes absurd and ludicrous.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
