Luxembourg court sets aside Sulu heirs’ attachment order to enforce US$15b claim against Malaysia

The District Court of Luxembourg had set aside an attachment order against Malaysia from a French arbitration court to enforce a US$14.92 billion (RM62.6 billion) payment to the purported "descendants" of the last sultan of Sulu.In March 2022, the French arbitration court instructed the Malaysian government to pay the Sulu Sultan's heirs.  In July, two Luxembourg-based subsidiaries of Petronas were seized by court bailiffs as part of the heirs’ effort to claim the award.In a statement issued yesterday (26 Jan), Datuk Seri Azalina Othman Said, Minister in the Prime Minister’s Department (Law and Institutional Reform), said Malaysia applied to the district court of Luxembourg to seek the lifting of the attachment order. The hearing took place on 5 December last year.“This decision vindicates the government’s policy to vigorously defend Malaysia in every forum to ensure that Malaysia’s interests, sovereign immunity and sovereignty are protected and preserved at all times.”“Malaysia has consistently refused to recognise the legitimacy of the purported arbitration orchestrated by the Claimants, " she said.“Malaysia has availed itself of all available legal remedies to invalidate the appointment of Dr Stampa and his purported ‘awards’.”She stressed that the Malaysian government "will spare no effort to this end".The self-proclaimed “successors-in-interest” to Sultan Jamalul Kiram II, initiated a claim against the Malaysian government through an international arbitration proceeding in Madrid, Spain since 2018.

Historical background

The Spanish arbitrator Gonzalo Stampa, reasoned that Malaysia had reneged on the 1878 agreements between Sultan Mohamet Jamal Al Alam (the then Sultan of Sulu) and Baron de Overbeck and Alfred Dent, representatives of the British North Borneo Company.Sultan of Sulu granted sovereign rights to parts of Sabah today, in return for an annual RM5,300 token payment.In 1936, the payment temporarily ceased when the last formally recognised sultan of Sulu, Jamalul Kiram II died without heirs.The payment resumed only after North Borneo High Court chief justice Charles F Macaskie named nine court-appointed heirs in 1939.Malaysia government took over these payments after the formation of the country in 1963 until Datuk Seri Najib Razak administration halted the payment in 2013 when more than 200 armed militants, believed to be linked to the Sulu Sultanate, invaded Lahad Datu and resulted in 78 deaths.The Malaysian government had claimed that the armed incursion caused a breach of the 1878 agreement, which the heirs of Sulu Sultan disputed.