I was never ruined but twice: once when I lost a lawsuit and once when I won one. – Voltaire, French author, playwright and humanist 

Malaysia is belatedly realising that the law’s outcomes can be hugely expensive. 

Early this year, an arbitration court in Paris awarded the heirs of the Sultan of Sulu a staggering US$14.92 billion (over RM69 billion) against the Malaysian government.

How did this come to pass? 

Its antecedents date back to 1878 and an agreement between the then Sultan of Sulu, one Baron de Overbeck (then Maharaja of Sabah) and the British North Borneo Trading Company’s Alfred Dent. 

The Sultan agreed to cede large tracts of land in Sabah to the company for an annual fee. The agreement also stipulated that the payment would be continued by future heirs. Indeed, the British continued the payments until 1963. 

The year saw the creation of the Federation of Malaysia with Sabah, Sarawak and Singapore joining Malaya to form a new country. The point here is that, in 1963, Malaysia’s new federal government continued the annual RM5,300 payment to the Sulu Sultan’s heirs. Indeed, it was maintained in unbroken fashion until 2013. 

During the year, over 200 Filipino militants “invaded” Sabah by way of Lahad Datu to claim the land in the name of the Sultan of Sulu. In the event, the gang surrendered but not before 16 Malaysians lost their lives. 

In seeming retaliation, the Malaysian government, then headed by Najib Razak stopped the annual payments to the Sultan’s heirs. But Kuala Lumpur had maintained those payments for 49 years, an unbroken stretch that seemed to presume a legal obligation on its part.   

It isn’t clear if Najib sought legal advice at the time. The Attorney General then was Gani Patail, a Lahad Datu native himself and a person who’d already been AG for eleven years. 

Nothing happened for four years until, sometime in 2017, the Sulu heirs suddenly took the matter to arbitration in Europe.

Why wait for four years? It had to be money. It was US lawyer Jonathan Sturges who famously quipped that “justice is open to everyone in the same way as the Ritz Hotel.” 

The quip was made in the early 1800s and it rings even more true now. According to Britain’s The Financial Times, “the heirs, backed by a London law firm, have been bankrolled by a UK investment fund, Therium, in a litigation process that has now cost in excess of US$10 million.”

Clearly, the sharks had sensed the blood in the water. Unfortunately, Putrajaya hadn’t. 

Indeed, the Najib administration ignored the matter altogether. The heirs, their lawyers and Therium, smelling money in the air, didn’t.   

Putrajaya is now awake to the danger: the Malaysian  government may have assets in at least 165 countries and many of them are at risk of  seizure. It is  moving to set aside the award. 

It will be long and expensive, alas. And a lesson in the perils of retaliation. 

ENDS