KUALA LUMPUR: Malaysia does not recognise a French arbitration court ruling on Monday which instructed the government to pay US$14.92 billion (RM62.6 billion) to the descendants of the Sultan of Sulu.
The Foreign Ministry and the Attorney-General's Chambers, in a joint statement, this is because Malaysia upholds its immunity as a sovereign state.
"The Malaysian government does not recognise the claim and did not participate in the purported arbitration proceedings because Malaysia has always upheld and has never waived its immunity as a sovereign state.
"In addition, the subject matter of the claim is not commercial in nature and thus cannot be subject to arbitration and the 1878 Agreement contained no arbitration agreement. We further stress that the claimants' identities are doubtful and have yet to be verified.
"On Jan 14, 2020, the High Court of Sabah and Sarawak rendered judgment against the claimants and declared that the 1878 Agreement does not contain any arbitration agreement; that Malaysia had never waived its sovereign immunity; that the arbitrator had no jurisdiction to resolve the matter and that the Sabah Court is the natural and proper forum to determine any claim in connection with the 1878 Agreement," said the statement.
Malaysia subsequently filed for the recognition and enforcement of the Sabah High Court decision in the Spanish High Court of Justice of Madrid but the application has yet to be heard.
The arbitration was initiated by the heirs and successors-in-interest of Sultan Jamalul Kiram II against the Malaysian government through international arbitration proceedings in Madrid, Spain.
On Monday, Spanish arbitrator Gonzalo Stampa rendered the final award to claimants over the alleged violation of the payments of RM5,300 cession money under the 1878 agreement entered by the then Sulu Sultan Sultan Mohamet Jamal Al Alam, Baron de Overbeck and Alfred Dent of the British North Borneo Company for Sabah, then known as North Borneo.
The court had ruled that Malaysia had violated the agreement after it stopped paying the descendants the annual RM5,300 cession money since 2013 following the Lahad Datu armed incursion.
The statement said that on June 29, 2021, the Spanish High Court of Justice of Madrid decided that the service of notice of the proceedings for appointment of arbitrator for purposes of the claim was not properly served to Malaysia in accordance with peremptory international rules and Spanish law.
It was also inconsistent with the High Court of Justice of Madrid's case laws on service of process on sovereign states.
"As a consequence of the nullification decision, Stampa is not an arbitrator in the purported arbitration proceedings and, therefore, all his decisions, including the final award, are null and void.
"The government of Malaysia completely rejects the purported final award dated Feb 28, 2022 which was rendered by Stampa," it said.
The ministry and the AGC added that notwithstanding the nullification decision of the High Court of Justice of Madrid, the claimants, in an attempt to circumvent this decision, without the Malaysian government's knowledge, proceeded to obtain an ex-parte order from the Tribunal de Grande Instance in Paris.
It was to recognise the partial award on jurisdiction rendered by Stampa on May 25, 2020, which had been previously annulled as a consequence of the decision of the nullification decision.
On the basis of the Exequatur Order, Stampa changed the seat of the arbitration to Paris to render the final award.
The statement read that as a result of the claimants' action, the Malaysian government filed an appeal against the Exequatur Order in the Courts in Paris and succeeded in obtaining an ex-parte order dated Dec 16, 2021 from the First President of the Paris Court of Appeal suspending the effects of the Exequatur Order in France and barring the claimants from relying on it.
"In violation and defiance of this suspension order, the claimants maintained that the Exequatur Order was in force and that a final award should be rendered with a seat set in Paris.
"Stampa upheld the claimants' request in disregard of the suspension of the effects of the Exequatur Order.
"Therefore, it follows that the final award rendered by Stampa on Feb 28, 2022 not only violates Malaysia's sovereign immunity but was also rendered in disregard of the Madrid and Paris court decisions.
"The Malaysian government strongly opposes the final award and upholds its position and stance to not recognise all the actions taken by Stampa in the purported arbitration proceedings as well as all his illegal decisions and awards," said the ministry and the AGC.
The Spanish Public Prosecutor has filed a criminal complaint against Stampa for serious contempt of court and professional intrusiveness, it said.
It added that the Criminal Court N.40 of Madrid has subsequently started a criminal investigation in connection with the illegal actions of Stampa.
"The Malaysian government will continue to take all necessary actions including legal actions to put an end to the claim and to ensure that Malaysia's interests, sovereign immunity and sovereignty are protected and preserved at all times," said the statement.