Paris: The Paris Court of Appeal's decision to annul the US$14.9 billion final arbitration award sought by the self-proclaimed heirs of the Sulu Sultanate marks a decisive legal victory for Malaysia. Sabah Appointed Assemblyman Datuk Roger Chin described the ruling as a significant development that strengthens the nation's legal standing, noting that the court found no arbitration agreement existed to justify the award.
According to BERNAMA News Agency, there remains one potential avenue for appeal to the French Supreme Court, but Chin viewed the prospects of the claimants succeeding as slim. The former Sabah Law Society (SLS) president explained that the arbitration process involved two distinct awards: a partial award on jurisdiction and a final award on the monetary claim.
Chin noted that Malaysia had previously won the partial award when the court determined there was no arbitration agreement, leading to its annulment. He explained that the recent decision by the Court of Appeal to annul the final award further solidifies Malaysia's position, as it was also found to be unsupported by a valid arbitration agreement.
The Paris Court of Appeal concluded that the arbitrator, Gonzalo Stampa, lacked jurisdiction and established that no valid arbitration agreement bound Malaysia to the proceedings. Chin emphasized that by nullifying the award at the seat of arbitration, Malaysia effectively addressed the "root" of the issue, making it unlikely for the claimants to succeed in enforcing the award elsewhere.
Chin observed that this episode serves as a crucial lesson for Malaysia to re-evaluate its approach to future arbitrations. He suggested that Malaysia's initial non-participation in the proceedings, due to the government's non-recognition of the claim's legitimacy, inadvertently allowed the claimants to secure the award by default.
He highlighted the significant time and resources required to reverse the outcome, as Malaysia has been working for about three years to set aside the award. Moving forward, Chin opined that the government must be more proactive in addressing potential arbitration threats and not ignore them, advocating for a rigorous and forceful response from the start.
On the legal aspect, he noted that while arbitration processes can be abused, this victory demonstrates that the law provides remedies to overturn spurious and illegal awards. Malaysia had earlier secured significant wins in the protracted dispute when courts in Luxembourg, the Hague Court of Appeal in the Netherlands, the Paris Court of Appeal, and the Spanish courts ruled in favor of the country.
The arbitration proceedings were initiated by eight Philippine nationals claiming to be heirs of the now-defunct Sulu Sultanate, seeking billions in compensation from Malaysia over Sabah. Stampa was appointed as arbitrator for the case by a Madrid court in March 2019, leading to the issuance of the 'Final Award'.