LAW and Institutional Reform Minister in the Prime Minister’s Department Azalina Othman Said said Malaysia was in the process of obtaining an annulment of the purported final award of US$14.9 billion (RM62.59 billion) issued by a Spanish arbitrator, Gonzalo Stampa, in the case brought by the purported heirs of the Sulu sultan.  

She said with this annulment, the government’s longstanding battle against Sulu claims would come to an end as the basis of the claims would cease to exist. 

“In the Sulu fraud, the purported heirs to the Sultan of Sulu have attempted to extort Malaysia of US$14.9 billion that is approximately RM62.59 billion, which is bankrolled by a third-party litigation funder, Therium. 

“Malaysia has spent a lot of time, effort, and resources to defend our nation from the frivolous claims in the Sulu fraud in Spain, France, Luxembourg, and the Netherlands. Despite this predicament, Malaysia stressed that what we are experiencing in the Sulu fraud is not unique to Malaysia alone. 

“Instead, it calls for a review of the conduct of arbitrators and for oversight of third-party litigation funders, including exploring transparency and disclosure obligations by the relevant parties,” she said in her keynote address at the London International Arbitration Colloquium 2023: State Sovereignty and Immunity in Commercial Arbitration at the International Dispute Resolution Centre in London today.  

Azalina also stressed that Malaysia’s journey in battling the Sulu fraud had not been easy as it was a case inherited from the past government. 

“We did not have the opportunity to address this case when it began. If the unity government of today had that opportunity, we would have done things very differently. 

“On the bright side, the many lessons we have learned from this debacle is why we are here today to come together and work on the weak links in the arbitration process and third-party litigation funding after hosting two successful international colloquiums in Malaysia on May 9, 2023 and July 4, 2023.” 

Azalina said as a result of the unity government’s relentless efforts, Malaysia obtained landmark victories in Paris and The Hague and other positive developments in the ongoing proceedings in the Sulu fraud. 

“These achievements were made possible through the joint and concerted efforts of the relevant government ministries and agencies under Prime Minister Anwar Ibrahim who helmed efforts in international relations and diplomacy through fostering joint collaboration to address best practices in arbitration and third-party litigation funding,” she said. 

Explaining why the Malaysian government was initiating these ongoing dialogues with experts in the arbitration industry from all over the world, Azalina said it was to shed light on precise arbitration practices, according to the rule of law, and to share Malaysia’s insight with the international arbitration community on the factual narrative of the purported heirs of the Sulu sultan’s claims against Malaysia. 

“This particular series today is the result of the collective effort by Malaysia to bring together the international arbitration community for the betterment of the arbitration system by sharing Malaysia’s hard-learned lessons from the Sulu fraud,” she said, adding that Malaysia, from the start, had encouraged and supported arbitration as a preferred dispute resolution.  

“We have the Asian International Arbitration Centre (AIAC), a reputable global hub for dispute resolution, located in the heart of Kuala Lumpur. I am delighted to share that just last Thursday, the AIAC signed a Memorandum of Understanding with SOAS Arbitration and Dispute Resolution Centre, University of London to foster teaching and research activities related to alternative dispute resolution in alignment with international best practices.  

“Our experience of the Sulu fraud has shown us that the sanctity of the arbitration process must always be upheld, and we therefore firmly oppose any abuse of the arbitration process including forum shopping,” she said. 

Also present were the High Commissioner of Malaysia to the United Kingdom Zakri Jaafar, Solicitor General of the Attorney-General’s Chambers of Malaysia Almalena Sharmila Johan, and AIAC’s director N. Sundra Rajoo.  

On June 6, the Paris Court of Appeal upheld Malaysia’s challenge against the partial award rendered on May 25, 2020 by Stampa in the case filed by the eight individuals. 

Malaysia had used all legal remedies to annul the award given by Stampa to the claimants in courts in Spain, France, Luxembourg, and the Netherlands. 

Malaysia scored another win when The Hague Court of Appeal on June 27 dismissed the Sulu group’s application to recognise and enforce the final award in the country. 

In their efforts to enforce the final award, the Sulu group had reportedly attempted to seize the assets of Malaysian petroleum company Petronas in Luxembourg and the Netherlands as well as targeted Malaysian diplomatic assets in France (including the embassy). 

In 2019, the group was reported to have taken legal action in the Spanish Court to seek compensation for land in Sabah, which was allegedly leased by their ancestors to a British trading company in 1878. – Bernama, September 25, 2023.