KUALA LUMPUR (Jan 26): The district court of Luxembourg has set aside the attachment order requested by the purported "heirs" of Sulu Sultan to enforce a US$14.92 billion arbitration award they obtained from a French arbitration court against Malaysia.

The attachment order was requested by the claimants in July last year, following the outcome of the arbitration that favoured them that was issued in March 2022.

“This decision vindicates the government’s policy to vigorously defend Malaysia in every forum to ensure that Malaysia’s interests, sovereign immunity and sovereignty are protected and preserved at all times,” said Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said. “The government will spare no effort to this end."

The Luxembourg court’s decision followed Malaysia’s application to seek the lifting of the attachment as interim relief. Hearing took place on Dec 5 last year, Azalina added.

When contacted, a spokesperson of the Sulu claimants told The Edge: "This is an Interim action. To our knowledge the judgment and orders have not been signed and we cannot comment on them substantively until that happens and we read them. Whatever the result of this interim action, the main legal process that validates our actions in Luxembourg continues."

The claimants received two arbitral awards from Spanish arbitrator Gonzalo Stampa in March 2022, following arbitration proceedings they initiated in 2018. Stampa found that Malaysia had reneged on a 144-year-old agreement signed in 1878 by the then Sulu Sultan that granted sovereign rights to parts of Sabah today, in return for an annual token payment of RM5,300.

Malaysia, which had been paying the sum, halted it in 2013 during Datuk Seri Najib Razak’s administration following the armed incursion of Lahad Datu by more than 200 militants believed to be linked to the Sulu Sultanate. It claimed the invasion caused a breach of the 1878 agreement, which the heirs disputed.

Malaysia refused to recognise the legitimacy of the purported arbitration and had sought legal remedies to invalidate Stampa’s appointment and his arbitral awards.

As a result, the Spanish court that initially appointed Stampa had retroactively invalidated his appointment. Stampa’s preliminary award in Madrid was also nullified by the Spanish Court in 2021, on grounds that Malaysia had not been notified correctly and suffered defenselessness.

After that, an ex-parte arbitration proceeding was initiated by the claimants and held in Paris that same year. However, the French courts have since stayed the enforcement of the purported US$14.92 billion final award rendered by Stampa in France, pending the outcome of Malaysia’s action to set it aside.

Last October, the claimants sought the Dutch court’s permission to enforce Stampa’s final award by seizing assets belonging to national oil company Petroliam Nasional Bhd (Petronas) in the Netherlands. Malaysia is taking legal action against the attempt.