M’sia ordered to pay RM62.6 billion in compensation to Sulu sultan’s heirs for breaching an agreement signed in 1878

Source: Confilegal, The Economist

History has a way of catching up with the present, and it would appear that in the case of violating an agreement signed in 1878, Malaysia is now being ordered by international courts to fork over RM62.6 billion in compensation to the remaining descendants of the last Sulu sultan.

Malaysia ordered to pay RM62.6 billion for breaching an agreement signed in 1878

Citing Spanish news site La Información, Malaysiakini reports that the ruling was made in an arbitration court in Paris, France, following what has been determined as a violation of an agreement signed between Sultan Jamal Al Alam, Baron de Overbeck and the British North Borneo Company’s Alfred Dent. This was said to have been the case after Malaysia had stopped making paying the Sultan’s heirs their annual cession money, which amounts to RM5,300 annually, after the Lahad Datu insurrection that occurred in 2013.

The verdict was passed by Spanish arbitrator Gonzalo Stampa in Madrid, Spain. Source: Global Arbitration Review
The verdict was passed by Spanish arbitrator Gonzalo Stampa in Madrid, Spain. Source: Global Arbitration Review

Spanish arbitrator, Gonzalo Stampa, was said to have been the one who issued the award to the Sultan’s heirs. According to him, the 1878 agreement which was signed in Spain, constituted a commercial ‘international private lease agreement’ for which Malaysia has breached in failing to pay the annual cession money. The case has been dubbed as the ‘largest arbitration in Spain’.

Agreement was for the exploitation of natural resources in the area during the 19th century

The agreement was for the lease in perpetuity of the exploitation of natural resources including pearls, bird’s nests and wood, from certain territories north of Borneo as well as adjacent islands in exchange for a yearly cession payment of RM5,300 from Malaysia. While the territories now belong to Malaysia, they were part of the Spanish empire in the 19th Century. Alfred Dent, who founded the British North Borneo Company, had been paying the amount until its bankruptcy. The payments were subsequently made by the British Crown up until Malaysia’s independence in 1957, when it became the Malaysian government’s responsibility.

International courts have ruled that Malaysia has to pay RM62.6 billion in compensation to the heirs of the Sultan of Sulu. Source: The Economist
International courts have ruled that Malaysia has to pay RM62.6 billion in compensation to the heirs of the Sultan of Sulu. Source: The Economist

The discovery of oil and gas in the region has led to a previous attempt by the sultan’s heirs to renegotiate the terms of the contract in the 1990s to no avail. It was said that the cession payments had stopped in 2013 after Malaysia claimed that the territory of the now extinct sultanate had in fact belonged to them since their independence in 1957.

Malaysia has 3 months to pay the amount

By measure of that verdict, Malaysia only has three months to pay off the amount unless the ruling is cancelled. Initially, the Sulu sultan’s heirs had attempted to claim US$32.2 billion (RM135.08 billion) from Malaysia, which had been supposed to recover the amount of unpaid cession monies while also the amount they believe they were owed for the discovery of oil and gas in the region.

The verdict was passed at Tribunal Superior de Justica de Madrid. Source: Confilegal
The verdict was passed at Tribunal Superior de Justica de Madrid. Source: Confilegal

The Sultan’s heirs were represented by Spanish law firm B Cremades & Asociados along with Paul Cohen and Elisabeth Mason of London’s 4-5 Gray’s Inn Square. The case was initially heard in Madrid until the Madrid High Court (Tribunal Superior de Justica de Madrid) annulled Stampa’s appointment, stating that Malaysia was not properly informed of the case and was thus considered ‘defenseless’. This prompted it to be moved to the French capital of Paris.

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Also read: The power of Twitter helps reunite M’sian woman with her long-lost father after 20 years of separation since childhood

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