KOTA KINABALU: An arbitration court in France has ordered Malaysia to pay US$14.9bil (RM62.6bil) to the descendants of the Sulu sultan but lawyers here believe that the government has an option to set aside the court ruling.

This came in response to online reports about the French court’s decision, which was said to be based on the alleged violation of payments of cession money under a 1878 agreement signed by Sultan Jamal Al Alam, among others.

According to the online reports, Malaysia had stopped paying the heirs to the Sultan Sulu their annual RM5,300 cession money since the 2013 Lahad Datu armed incursion.

Spanish news website La Información reported that Spanish arbitrator Gonzolo Stampa had issued the award in a Paris court and stated that the 1878 treaty was an “international private lease agreement” of a commercial nature.By not paying the cession money since 2013, Stampa said Malaysia had breached the agreement and would have three months to pay up, failing which interest would be charged.

Apparently, the sultan’s descendants’ initial claim was US$32.2bil (RM135bil).

This comprised the unpaid cession money as well as how much they believe they are owed for the oil and gas found in the region.

This case is linked to a ruling in 2020 made by the Kota Kinabalu High Court that Malaysia was the proper venue, and not the Spanish courts, to resolve disputes arising from the 1878 agreement.

The court had then ruled in favour of the Malaysian government in its suit against eight of the supposed descendants of the Sultan of Sulu.

According to the ruling, there was no binding agreement between Malaysia and the sultan’s heirs that compelled either party to submit to arbitration in the event of a dispute.

The Sulu heirs’ claim was originally heard in Spain but the case was later moved to Paris.

When contacted yesterday, Sabah Law Society president Roger Chin said Malaysia, which is a member of the New York Convention, is obliged to enforce the award.

(The convention provides for the enforcement and recognition of arbitral awards within contracting states.)

Chin said the government has the option to apply to set the award aside in France.

“If Malaysia refuses to make payment, the claimants will have the right under the New York Convention to enforce the award against Malaysian state assets in any of the 167 signatory state parties around the world,” he said.

Referring to the different rulings made by the French arbitration court and the Kota Kinabalu High Court, Chin said it remains to be seen which of the two decisions would be enforceable internationally.

(The New York Convention covers 167 countries, while decisions by the Malaysian High Court are limited to fewer than 10 countries under the Reciprocal Enforcement of Judgments Act.)

In the 2020 court ruling involving the case of the Malaysian government vs Nurhima Kiram Fornan & Ors, Chin explained that Malaysia had brought an action against the claimants to restrain them from proceeding with the arbitration.

He said the Malaysian government had also sought a declaration, among others, that there was no arbitration agreement between the parties; and that Malaysia was the proper forum to resolve the dispute over territorial rights arising from the deed of cession.

Chin said the High Court held, among others, that there was no nexus between Spain and the deed and Spain was remotely connected to the parties to the dispute.

While Malaysia did not appear at the Paris proceedings, he said unlike the Malaysian court where default judgments can be issued, it is not possible to issue a default award in international arbitration.

The Foreign Ministry and the Attorney General’s Chambers are expected to issue a joint statement on the French court ruling.