Minister Datuk Seri Azalina Othman Said and Spanish arbitrator, Dr. Gonzalo Stampa. Image source: UtusanTV

The appeal sought to reinstate Dr. Gonzalo Stampa as arbitrator in their dispute with Malaysia, following the annulment of his appointment by the High Court of Justice of Madrid (HCJM) in June 2021.

Background, Arbitration, and Appeal

The dispute stems from an outdated agreement between the Sultanate of Sulu and European colonizers, involving the cession (or leasing) of territory in present-day Sabah, Malaysia, in exchange for annual payments to the Sultan's heirs. Malaysia continued these payments after its independence until 2013, when they were halted following an armed incursion by militants claiming to represent the Sulu Sultanate.

In response to the cessation of payments, the self-proclaimed heirs initiated arbitration proceedings, leading to the appointment of Dr. Gonzalo Stampa as arbitrator by the HCJM in 2019. However, Malaysia contested this appointment, citing improper notification and lack of jurisdiction. Consequently, on June 29, 2021, the HCJM annulled Stampa's appointment and invalidated all actions he had taken in that capacity, including a preliminary award issued in Madrid.

Undeterred, the claimants filed a constitutional appeal on November 5, 2021, seeking to overturn the HCJM's annulment decision. They argued that the annulment was influenced by external pressures and sought the reinstatement of Stampa as arbitrator. However, the Spanish Constitutional Court rejected this appeal, affirming that the HCJM's decision was final, binding, and free from external influence.

Implications and Ongoing Developments

The verdict "proves that Malaysia’s legal strategy in countering the claims was the right approach and is yielding favorable results."

This ruling represents a significant victory for Malaysia in its ongoing efforts to challenge the claims of the Sulu heirs. Minister in the Prime Minister’s Department (Law and Institutional Reform), Datuk Seri Azalina Othman Said, stated that the decision "confirms the legal position that Malaysia has asserted since the dispute began." She further emphasized that the ruling "proves that Malaysia’s legal strategy in countering the claims was the right approach and is yielding favorable results."

Despite this setback, the claimants have pursued legal actions in other jurisdictions. In February 2022, Stampa, proceeding without recognized authority, issued a final award in Paris, ordering Malaysia to pay the claimants approximately $14.9 billion. This award has been the subject of legal challenges, with courts in France and the Netherlands ruling against its enforcement. Additionally, in December 2023, Spanish authorities initiated criminal proceedings against Stampa for contempt of court, culminating in a six-month prison sentence and a one-year ban from practicing as an arbitrator.

By successfully blocking enforcement of the Paris ruling, Malaysia has reinforced its jurisdiction and national autonomy. Azalina stressed that this ruling stands as "a reminder of the importance of upholding sovereignty and the rule of law in international disputes."

REFERENCES

Global Nation. (2022, November 29). Spanish Constitutional Court rejects Sulu heirs’ appeal. Inquirer.net. https://globalnation.inquirer.net/210310/spanish-constitutional-court-rejects-sulu-heirs-appeal

The Edge Malaysia. (2023, December 12). Spain charges arbitrator who awarded $15 billion to Sulu heirs in Malaysia dispute. https://www.theedgemalaysia.com/node/653850

The Times. (2023, July 4). Court rules on Malaysia's $15 billion Sulu saga after 146 years. https://www.thetimes.co.uk/article/court-ends-malaysias-15-billion-sulu-saga-after-146-years-sxz52b3tb