Malaysia Triumphs in $15 Billion Arbitration Case

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KUALA LUMPUR: The Hague Court of Appeal dismissed a bid by eight descendants of a former Sultanate attempting to enforce a US$15-billion arbitration award against the Malaysian Government, as indicated by a judgment released on the court’s website on 27 June 2023.

This dismissal is perceived as a significant victory for Malaysia, which disputed the validity of the claims and the arbitration process.

Last year, the Filipino descendants of the last Sultan of Sulu were granted US$14.9 billion by a Paris arbitration court following a long-standing dispute with Malaysia over a colonial-era land deal.

These heirs endeavored to seize Malaysian government assets in France, Luxembourg, and the Netherlands to impose the award.

The Malaysian government, which abstained from the arbitration, labeled the process illegal and pledged to counter the seizures. It succeeded in obtaining a stay on the award in France. Yet, the ruling remained enforceable overseas under a UN treaty on arbitration.

Nonetheless, the Hague court sided with Malaysia, indicating the original agreement lacked an arbitration clause. The court further noted that due to the French stay of the award, the claim was inoperative in the Netherlands.

Reacting to the court’s decision, Prime Minister Datuk Seri Anwar Ibrahim issued a statement stating that the Malaysian government welcomed the verdict by the Hague Court of Appeal, which he perceives as a landmark victory.

“This decision has blocked any attempt by the Claimants to enforce their illegitimate claims against the Government of Malaysia in the Netherlands,” he remarked.

Referencing a similar prior victory in the Paris Court of Appeal, Anwar expressed his confidence that his government is “closer than ever to completely nullifying the sham and abusive Final Award amounting to approximately USD15 billion.”

He anticipates that these decisions will deter the claimants from trying to impose the Final Award in other jurisdictions.

Anwar reiterated the government’s determination to protect Malaysia’s sovereignty, national security, and national interest, criticizing the Sulu case as an infringement of Malaysia’s sovereign immunity.

“The Government of Malaysia will fight by any means necessary against this flagrant exploitation and abuse of the international arbitral system,” he asserted.

He also pledged to undertake necessary measures to recoup the public resources spent in addressing these claims.

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