THE Hague Court of Appeal has dismissed the Sulu claimants’ application for recognition and enforcement of an arbitral award of US$14.9 (RM69.5) billion to be enforced in the Netherlands.

A judgment on the court website today said: “The court dismisses the requests of the Filipino nationals” to demand the execution of the arbitration award.

The Dutch judges held that the original 1878 agreement did not have a clause that bound the parties to arbitration.

It is recalled that the Paris Court of Appeal also ruled that the clause in the 1878 referred to a third party to the agreement to hear any dispute arising from the agreement between them or their successors. That third party was the consul-general of the British crown stationed in Brunei.

Given that the office had been dissolved, it rendered the clause inapplicable and became obsolete.

Accordingly, the arbitral tribunal that heard the Sulu heirs’ claim did not have jurisdiction over the case.

It must be remembered, though, that the above rulings are consistent with the rulings of the Malaysian judge who heard the Malaysian government’s application in 2019 for a number of declarations, including that there was no arbitration agreement in the 1878 agreement. (See Government of Malaysia v Nurhima Kiram Fornan & Ors [2020] MLJU 425)

Kota Kinabalu High Court Judge Mairin Idang had ruled that there was no provision in the 1878 agreement that could be construed either expressly or impliedly indicating the parties’ consent or intention to refer disputes arising from the agreement to arbitration.

The High Court judge said: “There is no provision in the agreement to indicate the parties’ agreement to submit their dispute to arbitration. There is also no provision to show that arbitration is the exclusive forum in which disputes between parties are to be resolved.

“The agreement is silent as to the specific dispute to be referred to arbitration, the seat of arbitration and appointment of arbitrators. These are among the requirements needed to indicate parties’ submission to arbitration.

“Absence of which I found no valid legal basis for the (Sulu heirs) to be referring dispute arising from the agreement to the Spanish arbitration.

“Furthermore, it has been clearly and expressly provided for in the agreement that any dispute that arises between the parties to the deed shall be submitted to Her Britannic Majesty’s Consul-General for Borneo.

“As the dispute settlement provision was drafted in such plain and unambiguous manner, I cannot but read such provision literally to educe (bring out) the intention of parties in the agreement. “Reading the agreement, it cannot be imputed to contain any arbitration clause. As such, I found that such submission of disputes to Her Britannic Majesty’s Consul-General for Borneo could not be regarded as an actual reference to arbitration. There is not an iota of evidence to infer that such reference ipso facto means a reference to that entity to act as an arbitrator.”

The judge next referred to a 1939 civil suit between Dayang Dayang Haji Piandao Kiram of Jolo, Philippines and eight others and the government of North Borneo and others, where the plaintiffs, who were ostensibly the Sulu heirs, had moved the High Court of the state of North Borneo for a declaration that they were entitled to receive the cession monies payable by the government of North Borneo under the 1878 agreement. The chief justice of the state of North Borneo at the time, C.F.C. Macaskie, in his ruling allowed the relief sought for by the plaintiffs.

The judge observed: “Such ruling (of the chief justice) is of great significance. It shows that even the heirs and successors of the sultan of Sulu have recognised and acknowledged that there is no arbitration provision in the 1878 agreement.

“The act of the heirs and successors of the late sultan of Sulu in bringing their cause before the High Court of the State of North Borneo must be deemed as waiver of any form of arbitration under the agreement.

“In addition, … if the dispute settlement provision is to be regarded as an arbitration agreement, such provision would be rendered inoperative and incapable of being performed as the position of Her Britannic Majesty’s Consul-General for Borneo no longer exists.”

So, in saluting the rulings of the French and Dutch judges, let’s also celebrate and take pride in the acute judgment of our own Justice Mairin.

Mention must be made as well of the two senior federal counsels who submitted before the judge for the Malaysian government, Alice Loke Yee Cing and Narkunavathy Sundareson. 

Best wishes for Arafah Day and Hari Raya Haji. – June 28, 2023.

* Hafiz Hassan 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.