• Sulu heirs allege Malaysia breached Sabah region land contract

• l Therium Capital Management said to pour $20 million into case

The Supreme Court of the Netherlands ruled in favor of Malaysia on Friday, dismissing an appeal brought by the heirs of the Sultanate of Sulu. The group, backed by litigation funder Therium Capital Management, sued the country for breach of a contract dating back to the early 1800s.

The new ruling puts Therium’s reported $20 million investment in the case in further jeopardy. The company financed the Sulu heirs through nine rounds of funding since 2017, according to Reuters.

“Malaysia welcomes this landmark ruling as a momentous victory for the rule of law, representing a further step towards the end of the Sulu case and the preservation of the sanctity of international arbitration as an alternative form of dispute resolution,” Azalina Othman Said, an official in the Malaysian prime minister’s department, said in a statement.

A Therium spokesperson didn’t immediately respond to a request for comment.

The underlying dispute involves descendants of a sultan who ruled part of the region—now known as Sabah—in the late 1800s. They filed a breach of contract claim against Malaysia when it discontinued annual payments of around $1,300 for a lease on their land.

A Spanish arbitrator who awarded the group $14.9 billion in damages was later convicted on a related criminal charge. Gonzalo Stampa was sentenced to six months in jail for ignoring an order to close the proceedings after the court found that the Malaysian government had not been properly served in the matter. Stampa instead sought to move the case to Paris.

The claimants attempted to enforce the award in Luxembourg. They served the Malaysian state energy company Petronas with seizing orders for its assets in nine banks in 2022, which was set aside.

Petronas responded by accusing Therium of misconduct in the dispute. It asked a federal court in Manhattan to order Therium and its parent company to turn over subpoenaed financial documents and communications. Petronas said it plans to sue the companies and their lawyers in Spain, claiming losses from the seizure of assets in Luxembourg.

Petronas alleges that Therium, along with the Sulu claimants and their lawyers, acted with “willful negligence” by ignoring the revocation of Stampa’s authority as arbitrator, requesting he move the seat to Paris and inducing him to commit the offense.