What about Sabah?

SEVENTEEN years ago, I went to Kota Kinabalu, Sabah, with a university colleague, to extend technical assistance to a young Malaysian medical doctor who joined the operations research training on malaria prevention and control, which our team conducted for some Southeast Asian participants, under the auspices of ACT Malaria and the World Health Organization Regional Office for Western Pacific. The Malaysian medical doctor was married to a Filipina who converted to Islam, and whose parents migrated to Sabah. He introduced us to his country’s well-supported health system, particularly its malaria program. We joined a brief city tour, saw some awesome mosques, a beautiful university campus and a night market where we bought cultured pearl necklaces and very good, strong coffee. We also went to the foothills of Mount Kota Kinabalu, a popular destination for tourists and mountaineers. On our way back to the city, there was a long traffic jam because all vehicles were patiently waiting for a big turtle to cross the highway!

In a private conversation with my colleague, I expressed my disappointment about losing Sabah to Malaysia because I was under the impression then that our country and the late Sulu Sultan’s heirs no longer laid claims over this place. To my knowledge, the Sabah issue did not hog the headlines after the EDSA revolt because the national leaders appeared to have placed this matter on the back burner. Malaysia also began repatriating several thousand undocumented Filipinos from Sabah at the turn of this millennium, so this reinforced my notion that this state was no longer ours to claim. Honestly, I did not realize then that the Sabah issue was a continuing saga that spans about a century and a half.

After the failed incursion by over 200 followers purportedly of the Sulu Sultan to reclaim Sabah in March 2013, I have not heard much about the Sabah case. There were more news items about Malaysia’s role in facilitating peace agreements between our country’s national negotiators and the Moro Islamic Liberation Front, which eventually led to the passage of the Bangsamoro Organic Law in 2018, and the establishment of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in 2019. I also do not recall any candidates for president in last May’s national elections mentioning the Sabah claim in their campaigns. There was more emphasis on how to deal with China on the South China Sea (West Philippine Sea) issue.

The astounding news in March this year jolted many of us, which stated that a French arbitration court instructed the Malaysian government to pay the enormous amount of $14.9 billion to the legal heirs of the late Sulu Sultan, Jamalul Kiram 2nd. Up until this news, I have not heard that the Sulu Sultan’s descendants initiated a legal case against the Malaysian government five years ago, to obtain payment over Sabah, which they said their forefathers had leased to a British trading company in 1878. The Malaysian government did not participate in this arbitration, but it was invited and informed about its activities. And in the succeeding months, renowned arbitration lawyers in Europe have started seizing the Malaysian government’s assets in different countries, including the assets of two Petronas subsidiaries in Luxembourg. And this rattled the Malaysian parliament and the Sabahans.

The Sabah issue provided non-lawyers like me with a quick legal lesson about international arbitration litigation from our own distinguished lawyers particularly Gilbert Cojuangco Teodoro (I voted for him in his bid for a Senate seat in the last national elections) and Saul Hofilena Jr. (a columnist of this newspaper). In a nutshell, I learned that this case, which was filed by the Sulu Sultan’s heirs against the Malaysian government, is a private, “commercial arbitration” and does not refer to sovereignty or proprietary concern over Sabah (formerly known as North Borneo). I understand that our national government should not get involved in this case because this is a private contract, not a treaty (a ratified formal agreement between countries).

Sabah became the property of the Sultan of Sulu in the 1400s because the Sultanate of Brunei gave over 73,000 square kilometers of land as a gift for his support in quashing a rebellion. Recognizing the Sulu Sultan heirs’ ownership of Sabah, Gustavus Baron Von Overbeck, Austrian consul-general in Hong Kong, and Alfred Dent, an Englishman, secured a lease in 1878. The lessees agreed to pay 5,000 Mexican dollars annually and in perpetuity. The rental was raised to 5,300 Mexican dollars in 1903 because the lessees wanted additional land for their business, the British North Borneo Company.

The lessees continued the annual payment, but for no apparent reason, this stopped in 1936. So, the Sulu sultan’s heirs filed a case against them in North Borneo’s high tribunal court. It was unclear why the term “cessation” rather than “lease” was included in the 1939 court proceedings. The term “padjak” which means lease or rent in Bahasa (language) Melayu also appeared in this document. The annual payment continued after the lessees relinquished their company to the United Kingdom, and even after Malaysia became an independent nation in 1963. The annual lease payment was paid through the Malaysian Embassy in Manila (although the term “cessation” was reportedly included in the payment documents).

The annual lease payment stopped after the failed invasion of Lahad Duat by the Sulu Sultan followers in March 2013. I learned that the contract has a clause that specifies that if there would be any disagreement or problem, both parties will seek arbitration from the Sultanate of Brunei. Because this sultanate no longer existed, the Sulu Sultan’s heirs sought external support by hiring prominent arbitration lawyers from Spain and England, with financial support from Therium, one of the longest well-known litigation funding firms worldwide. The French court applied the arbitration rules of the New York Convention, which has 169 member-signatories, including Malaysia and the Philippines. The arbitration payment for the heirs is enormous because it includes restitution for computed interest from income obtained by Malaysia from gas and oil extracted from Sabah, from 2013 until 2044. The Sulu Sultan’s heirs appear to be vindicated with this development, but the Malaysian government is reportedly appealing this case to the New York Convention members. And the Sabah saga continues.