RECENT news once again surprised the nation with the alleged claim from Sulu heirs on Malaysian assets that purportedly have been seized by them.

This was nothing new, given the fact that such an issue was brought to our attention in 2019 when the Sulu heirs commenced an arbitration proceeding in Spain. However, the arbitration award delivered by Gondoza Stampa was not recognised by Malaysia.

Malaysia then applied to strike out the award. In return, Stampa brought said decision to France to enforce it. Malaysia is a signatory to the New York Convention, and the arbitration decision made by Stampa, concerning the compensation of a sum of US$14.92 billion (RM66.38 billion) to the Sulu heirs was upheld in France’s court.

This act of Stampa is known as forum shopping, and was explained by Hafiz Hassan in a previous article in The Malaysian Insight. 

There were two reasons why the Malaysian government made such a decision, an anti-arbitration injunction to restrain foreign arbitration proceedings by the High Court was laid down in the case of Government of Malaysia v Nurhima Kiram Fornan & Ors [2020] MLJU 425.

Firstly, it is on the principle of sovereign immunity. Malaysia has sovereign immunity from foreign judicial and arbitration proceedings unless waived. 

Secondly, according to the principle of forum selection, the Sabah High Court is the proper forum to determine the dispute, being the successor of the former State of North Borneo.

Thus, the question arises of how the enforcement of the Paris award takes place in Luxemburg?

There are a few conclusions that can be drawn from the situation above. Firstly, perhaps the Malaysian government had delayed in applying to set aside the award, thus allowing the Sulu heirs to enforce the arbitration award in Luxemburg.

Secondly, the court in Luxembourg can enforce the arbitration award based on their New Code of Civil Procedure (NCCP), as explained by Hafiz Hassan in his article . The award given under France’s jurisdiction was recognised and enforceable because the courts declared the enforcement based on Article 1251 of the NCCP, and not the New York Convention.

This is despite the fact that Malaysia does not recognise the arbitration award as a signatory to the New York Convention, which in turn gives the Sulu heirs the right to enforce the award against Malaysia’s assets.

However, such non-recognition from Malaysia is not needed if the enforcement of the arbitration award is enforced according to the New York Convention.

Nevertheless, it’s not to say all is lost, as the Malaysian Government has 2 choices. They can set the arbitration award aside, as they are doing now, or resist the enforcement of the award around the world on a case-to-case basis.

Hence, if a stay is applied, to the country member of the New York Convention, the stay only has effect in that country, and not in any other parts of the world that are signatories to the New York Convention.

Hence, the enforcement of the award can still be challenged.

Perhaps, the saga of the Sulu Heirs is not over yet?

 Matilda George reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.