Paris Court Annulment Of Sulu Final Award Marks Landmark Legal Victory For Malaysia

KOTA KINABALU, Dec 12 (Bernama) -- The Paris Court of Appeal’s decision to annul the US$14.9 billion final arbitration award sought by the self-proclaimed heirs of the Sulu Sultanate marks a decisive legal victory for Malaysia.

Sabah Appointed Assemblyman Datuk Roger Chin described the ruling as a significant development that strengthens the nation's legal standing, noting that the court found no arbitration agreement existed to justify the award.

Acknowledging that there remains one potential avenue for appeal to the French Supreme Court, he viewed the prospects of the claimants succeeding as slim.

The former Sabah Law Society (SLS) president explained that the arbitration process involved two distinct awards, namely a partial award on jurisdiction and a final award on the monetary claim.

“One is the partial award, which we had won last year. That one, the court said, there was no arbitration agreement. Therefore, they set aside the partial award. So, that's the initial award.

“And now is the final award, which is the last part of it, which the Court of Appeal has also said cannot stand because there is no arbitration agreement as well," he told Bernama when asked to comment on the ruling.

The Paris Court of Appeal concluded on Dec 9 that the arbitrator, Gonzalo Stampa, lacked jurisdiction and further established that no valid arbitration agreement bound Malaysia to the proceedings.

Chin emphasised that by nullifying the award at the seat of arbitration, Malaysia has successfully attacked the "root" of the problem.

“Most definitely (this strengthens Malaysia's position) because what happens in arbitration is this, once you can attack the root, which is the source of the arbitration award, and you can get rid of it, if they try to use that to execute in other parts of the world, it’s highly unlikely that they will be able to succeed.

"If you try to use it in another country, the other country will most likely look at it and say, 'but your original award is now no longer valid, why should we apply it ?" he said.

Chin observed that this episode serves as a crucial lesson for Malaysia to re-evaluate how it handles future arbitrations, particularly questioning whether the original strategy of non-involvement was the most effective approach.

He pointed out that Malaysia initially chose to ignore the proceedings because the government did not recognise the legitimacy of the claim, but her refusal to participate inadvertently allowed the claimants to secure the award by default.

"Because they got the award, we are on the back foot, and we are trying to set it aside until now. It has taken us about three years to do it," he said, highlighting the significant time and resources required to reverse the outcome.

Moving forward, Chin opined that the government must be more aware of potential arbitration threats and not ignore them, stressing that whenever such claims arise, Malaysia must "attack it rigorously and with full force" from the start rather than waiting until the end.

On the legal aspect, he noted that while arbitration processes can unfortunately be abused, evidenced by the arbitrator currently facing imprisonment, this victory proves that the law provides the necessary remedies to set aside spurious and illegal awards.

Malaysia had earlier secured significant wins in the protracted dispute when courts in Luxembourg, the Hague Court of Appeal in the Netherlands, the Paris Court of Appeal and the Spanish courts ruled in favour of the country.

Previously, eight Philippine nationals claiming to be heirs of the now-defunct Sulu Sultanate initiated arbitration proceedings in Spain, seeking billions in compensation from Malaysia over Sabah. In March 2019, a Madrid court appointed Stampa as arbitrator for the case, and he later issued the ‘Final Award’. 

-- BERNAMA