Luxembourg court issues fresh seizure order for Petronas units over US$15b claim by Sulu heirs

Luxembourg court issues fresh seizure order for Petronas units over US$15b claim by Sulu heirs

New seizure orders have been issued by Luxembourg court bailiffs on two units of Malaysian state oil company PETRONAS this week.

The second order, which was issued on Tuesday (14 February), came after the purported “descendants” of the last sultan of Sulu attempted to enforce a US$15-billion award they had previously won against Malaysia.

The sultan’s heirs won the award last year from a French arbitration court after a long-standing dispute with the Malaysian government over a colonial-era land deal.

Paul Cohen, the lawyer representing the sultan’s heirs, confirmed that the first seizure order was lifted by the Luxembourg district court due to a minor issue, which has since been addressed.

However, the court did not make a ruling on the arbitration’s merits.

“There was a technical ruling that has now been effectively dealt with, and the freezing orders are once more in place on the Petronas assets in Luxembourg,” he said.

The Petronas Azerbaijan (Shah Deniz) and Petronas South Caucasus units were initially seized in July 2022.

Malaysia, which did not participate in the arbitration, maintains maintains that the process is illegal. Malaysia government has vowed to use all legal measures to prevent its assets, including state-linked companies, from being seized overseas.

The order was set aside by the District Court of Luxembourg last month.

PETRONAS has confirmed the new seizure orders for the two units and their parent company, but it maintains that the heirs’ actions are baseless, and the company will continue to defend its legal position.

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 (US$1,200) 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.

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