Gonzalo Stampa, who ordered Malaysia to pay the Sulu claimants $14.92 billion after his position as arbitrator was annulled, has been convicted for his involvement by a court in Madrid on December 22nd, 2023, and will serve six months in prison. Image Source: Murray Hunter

The claimants to the Sulu Sultanate are seeking to reinstate a $14.92 billion award to be paid for by Malaysia—a ruling first handed down by former arbitrator Gonzalo Stampa and voided by courts in Spain and France.

The dispute is rooted in an 1878 agreement under which the Sultan of Sulu granted control of Sabah to the British North Borneo Company in exchange for annual payments—payments Malaysia continued symbolically after Sabah became part of the federation in 1963. Malaysia would halt these payments in 2013 after a deadly incursion into Sabah by militants claiming links to the Sulu claimants.

In 2019, the Sulu claimants would file their suit in Spain over these payments with substantial backing from litigation funding firm Therium. Their cause has since received pushback in no less than five courts in Spain and France. It has also led to unsuccessful attempts by private actors to take control of Malaysia’s national assets in France, Luxembourg, and the Netherlands.

At the heart of this drama lies a fundamental legal dilemma: can a sovereign nation be forced into private arbitration? And why are European courts far removed from Sulu and the Philippines ruling on billions in Southeast Asian assets?

Consent: how arbitration works and its legal basis

Arbitration is a dispute resolution mechanism where parties mutually agree to submit their differences to an impartial third party.

The claimants chose Spain partly because of its historical links to the Sulu Sultanate, which was nominally under Spanish influence in the 19th century. Spain’s perception as an arbitration-friendly legal environment likely also played a role.

This arbitration process occurs outside of traditional courts, with the courts designating individual arbitrators like Gonzalo Stampa to rule on disputes between consenting parties.

The legitimacy of arbitration derives almost entirely from consent, usually in the form of a contract or treaty. Without consent, arbitration would pose serious questions on sovereignty with unilateral third-parties ruling on the lives and wealth of countries in Southeast Asia.

Without consent, arbitration would pose serious questions on sovereignty with unilateral third-parties ruling on the lives and wealth of countries in Southeast Asia.

The Sulu claimants argue that the 1878 BNBC Agreement already contains language agreeing to the use of arbitration in the event of a dispute. However, Malaysia disputes this, saying no such clause can be found in the agreement and that the Malaysian Federation itself never agreed to resolve the issue through a European arbitrator in the 21st century.

Indeed, the initial arbitration in Spain and France were carried out unilaterally without Malaysia’s participation. Without consent, Malaysia contends, the arbitration process is legally baseless.

In 2021, Spain’s High Court of Justice reached a similar conclusion and annulled Stampa’s appointment as arbitrator. This annulment would have ended the case—but Stampa unilaterally continued proceedings regardless, ignoring the Spanish court and relocating the seat of arbitration to Paris and issuing the $14.92 billion award in February 2022.

Stampa unilaterally continued proceedings, ignoring the Spanish court.

Why Paris?

Similar to Spain, France is known as an arbitration-friendly jurisdiction and a frequent forum for international enforcement. Stampa and the claimants therefore turned to France to enforce the award through seizure of Malaysian diplomatic and state-owned assets.

France also has a robust interpretation of the New York Convention (1958), which is ratified by more than 170 countries. It obliges member states to recognize and enforce arbitration awards made in other member jurisdictions provided the process was legitimate.

Furthermore, while awards are enforceable among signatories of the New York Convention, the dismissal of awards in the court of origin is not automatically recognized in France.

This environment can facilitate a legal strategy seized on by the Sulu claimants: forum shopping. The strategy encourages claimants to repeatedly look for jurisdictions until one is favorable to their claim, especially if the losing party has assets vulnerable to seizure there.

This environment can facilitate a legal strategy seized on by the Sulu claimants: forum shopping.

A Rejected Strategy across Europe

Nonetheless, the Paris Court of Appeal rejected the enforcement effort in 2023. It found there was no binding arbitration clause in the 1878 agreement and that Malaysia’s sovereign immunity further barred enforcement.

In 2024, France’s Court of Cassation—the highest civil court—upheld this decision, affirming that without consent, the arbitration had no legal foundation under French or international law.

The Sulu claimants remained undeterred and also sought enforcement in other European jurisdictions, targeting Malaysian assets in Luxembourg and the Netherlands. While these attempts saw initial success, the seizures were successfully blocked in January and June of 2023 respectively.

As if to add to the dramatic legal saga, Azalina Othman Said—a senior minister representing the Federation of Malaysia in Sulu disputes, has reported that Luxembourg overturned the original seizure orders due to the Sulu claimants’ provision of false addresses to the court.

Luxembourg overturned the original seizure orders due to the Sulu claimants’ provision of false addresses to the court.

What’s Next?

The French Court of Appeal will review the case on July 7th, 2025 in what may prove to be only the latest episode in a lengthy legal battle.

While the claimants say they are seeking justice, others worry the case has mostly benefited foreign legal teams and financiers—who stand to profit if even a small fraction of the near $15 billion is seized from the people of Malaysia.

While the claimants say they are seeking justice, others worry the case has mostly benefited foreign legal teams and financiers.

The protracted use of forum-shopping has had consequences: Gonzalo Stampa has been convicted of contempt of court by Spain for his attempts to bypass their annulment of the arbitration by moving the case to France.

Meanwhile, Therium, the principal litigation financier that has bankrolled the Sulu claimants’ costly strategy has itself faced recent financial troubles. Therium has since handed control of its caseload in 2025 to another firm, the Fortress Investment Group.

Gonzalo Stampa has been convicted of contempt of court by Spain for his attempts to bypass their annulment of the arbitration.

How this will impact the strategy of the Sulu claimants remains to be seen. In any case, the years-long attempt to resolve a Southeast Asian question in Europe has unfortunately tied Sulu’s name to a legal strategy that has faced setbacks in multiple jurisdictions.

REFERENCES

Abd Rahman, K. P., & Rahman, F. A. (2022, November 30). Sovereignty, forum shopping, and the case of the Sulu Sultanate’s heirs. The Diplomat. https://thediplomat.com/

Bloomberg Law. (2025, April 22). Litigation funder Therium conducts layoffs amid upcoming shift. Bloomberg Law. https://news.bloomberglaw.com/

Chambers and Partners. (n.d.). Litigation vs. arbitration: What’s the difference? Chambers and Partners. https://chambers.com/

Khamitova, D., & Sassine, R. (2022, March 31). Can you still enforce awards in France that have been set aside? Clyde & Co. https://www.clydeco.com/

Law Society Gazette. (2024, January 5). Arbitrator in $14.9bn case jailed following intervention by Malaysia. https://www.lawgazette.co.uk/

Oxford University Press. (n.d.). International arbitration (Chapter abstract). In International arbitration: Law and practice (pp. 1–20). Oxford University Press. https://academic.oup.com/

Piñeiro, J., Virzi, F., Ros, N., & Martín, L. (2024, August 22). International arbitration 2024: Spain. In Global practice guides. Chambers and Partners. https://practiceguides.chambers.com/

The Lawyer. (2025, June 10). Therium hands off case portfolio to Fortress in major shift. The Lawyer. https://www.thelawyer.com/