(Caption by Nikkei: Lawyer Paul Cohen says he was intrigued by the historical nature of the Sulu case. (Photo courtesy of 4-5 Gray's Inn Square)

The executive connected the family to Cohen, who describes himself as a “quasi academic” before a legal career counseling governments and private parties in arbitrations involving energy, bribery, fraud and intellectual property.

An academic background in history, he says, differentiated his approach from previous unsuccessful attempts to bring the Kirams’ claim to court. The Sabah claim was an intriguing historical quandary, one that piqued his interestuntil he could find a legal angle, he said.

“Nothing about this case is normal,” Cohen told Nikkei Asiafrom London.

But, he added, “this is a modern commercial arbitration. You just have to get over the initial bizarreness.”

On and off for a year, Cohen pored over family documents and archives in London before he found a cold legal basis for a commercial suit: Malaysia’s nonpayment had breached the British North Borneo Company’s contract with Jamalul II, which merited renegotiating after the discovery of oil and gas in Sabah.

“What clinched it for me was the clients told me they received checks from the Malaysian government,” said Cohen. Checks from 2011 signed by the Malaysian ambassador in Manila were submitted as evidence to the arbitrator when Malaysia denied knowledge of the heirs’ identities.

Cohen traveled to the Philippines in 2015 for his first meeting with the eight administrators, where it was immediately clear that the family did not have the means to pursue the claim. The London-based litigation funder Therium has bankrolled the Kirams’ case, the Financial Times has reported. Cohen’s team declined to comment on their financial backers.

Third-party financing has become increasingly common in such arbitration proceedings, said Harald Sippel, a Kuala Lumpur-based lawyer who has worked on over 80 arbitrations, adding that it allows claimants to pursue cases they would not otherwise be able to. "Funders want appropriate returns, so they would never finance a claim that doesn’t have a very good chance of success,” he said.

If the heirs ever see a payday from Malaysia, financial backers would get a substantial cut greater than the tens of millions of pounds spent so far. Therium did not respond to Nikkei Asia's request for comment.

Initially skeptical of another failed approach, the administrators were “emotional” upon learning that Cohen could take their claim to European courts.

The elders delivered the news to the family soon afterward. “Let’s focus on winning the case. If we win, then we can continue the argument over who the rightful sultan is,” they told the contending branches.

Lawyers for the Sulu heirs initially brought the claim to a Spanish court because the contract was signed on Jolo island, when the Philippines was under Spanish rule. The contract named the British consul-general in Sabah as the arbiter, but the present-day British government declined to adjudicate. A Spanish court accepted the claim and appointed Gonzalo Stampa as arbiter.

With Malaysia pressing Spain to dismiss the claim, however, the claimants applied to move the venue to France, where the final award was ultimately issued.

The first summons, in 2019, from Stampa came as a shock to Tommy Thomas, whose tenure as Malaysian attorney general was already off to a rough start. His appointment in 2018 by Prime Minister Mahathir Mohamed was opposed by the Malay political establishment who disapproved of Thomas, an Indian Christian from Kuala Lumpur.

“I never expected to deal with any Filipino or other interest in, or claim to Sabah or its resources during my time in office. Hence the total surprise when I was briefed sometime in 2019 of a separate and independent claim by private individuals, all of whom claimed to be descendants of the Sultan of Sulu, for annual compensation,” Thomas wrote in his 2021 memoir.

He recalled that 1963 was the first time he had heard of the Sulu claim to Sabah, as the Philippines had opposed the inclusion of North Borneo in an independent Malaysia.

“Malaysian officialdom and common folk thought of it as a historical quirk that was settled matter from the formation of Malaysia,” said Oh Ei Sun, an international legal scholar and a former political secretary to Prime Minister Najib, Mahathir’s predecessor.

Thomas was advised that it would be “perilous” to ignore the summons because Malaysia had signed an international treaty to enforce commercial arbitration awards. If arbitrators awarded damages to the claimants, Malaysian assets in any member country could be seized.

Malaysia sent representatives to arbitration proceedings in Spain for three weeks in 2019, then ceased participating entirely. Spanish arbitrator Stampa continued adjudicating despite Malaysia’s absence.

In February 2022, Stampa ruled in the Kirams’ favor with the award of $14.9 billion, dwarfed only by the $50 billion awarded to former shareholders of Yukos, the oil and gas company seized by Russian authorities during 2004-2007. That award was overturned in 2021 by the Dutch supreme court.

Kuala Lumpur’s political class views the Sulu heirs’ lawyers in London with suspicion for litigating against Malaysia in European courts, seeing it as a case of former colonial powers eager to redress imperialist wrongs — at their country’s expense.

“Suing a country is a big-league game," Oh said. "Sovereign immunity is held to be sacrosanct. Once invoked, all states defer to that. A private party wouldn’t be able to come into court at all."

Malaysia argues that the contract between the sultan and the British company was not a lease but a cession of rights to Sabah. The sultan and British company’s authority was subsumed by the Philippines and Malaysia when Sulu became part of the former and Sabah of the latter. Any arbitration, therefore, should be between the governments in Manila and Kuala Lumpur, and any remaining rights of the family were voided when Agbimuddin Kiram invaded Lahad Datu.

But the case was brought as a commercial claim for an unpaid lease by Cohen, similar to companies bringing claims against governments that nationalize private assets.

This March, bailiffs in France tried to enforce the award by attempting to seize three properties belonging to the Malaysian government. However, Malaysia inched ahead in June when appeals courts in Paris and the Hague rejected the authority of arbitrator Stampa and denied the award’s enforcement in France and the Netherlands, where Petronas holds some overseas assets.

Malaysian Law Minister Azalina Othman Said hailed the ruling as “a decisive victory in Malaysia’s ongoing pursuit of legal remedies, which Malaysia is confident will result incomprehensive defeat for the claimants and their funders.”

But the case is not over. The Paris appeals court ruling appeared favorable to Malaysia but maintained that the contract was a lease that had an arbitration clause, keeping legal avenues open for the heirs. “The claimants will carefully review the decision and are considering their options before the French Supreme Court,” lawyers for the Sulu heirs said in a statement.

Experts say the claim is unlikely to go away soon. "Given the large amounts at stake, I would assume that the claimants will continue to attempt enforcement proceedings for years to come," said Sippel, the Kuala Lumpur lawyer. "They have spent millions on legal fees and can hardly afford walking away from this now. Malaysia would then have to oppose these enforcement proceedings as they occur," he said.

Manila, for its part, has officially stayed out of the commercial arbitration despite calls from politicians to press the sovereign claim. Philippine public opinion occasionally swings around to support the claim, despite a complicated history between the sultan’s heirs and Manila. The Philippines, a republic, is prohibited from recognizing any monarchical lines.

Politically charged coverage of the arbitration by the Malaysian and Filipino press has fanned nationalist flames. Coverage escalated in recent months as Law Minister Azalina waged a public relations campaign against the arbitration on behalf of Anwar Ibrahim’s new government.