No Rush To Judgment On RM63b ‘Sabah’ Award For Sulu Heirs – Part 2

Lahad Datu was the scene of a standoff in 2013 between Malaysian security forces and Sulu 'intruders'.
Lahad Datu was the scene of a standoff in 2013 between Malaysian security forces and Sulu 'intruders'.. Photo credit: Wikimedia Commons

It would be odd for a court to agree on compensation for Breach of Agreement and not fix statutory interest, payable on a compounded basis, until full and final settlement. Read Part 1 on the Sulu heirs here.


In Malaysia, the court would generally fix interest on compensation payable at a statutory 8 per cent per annum and compounded. Based on cases in court, a lower and probably minimum 4 per cent per annum, also compounded, can be declared.

The court can, and does waive interest upon Application, if an “errant” party approaches it and offers to pay up, with or without prejudice. The court, can also further reduce the compensation amount upon Application.

In a recent AirAsia Group case, for example, the court only offered 0.5 per cent of the estimated RM600m to RM900m travel refund due to passengers for AirAsiaX flights cancelled by gov’t restrictions.

These restrictions, to digress a little, took their cue from the pandemic brought by the novel Coronavirus. The court ruled that in law the affected passengers were also creditors i.e. in the same category as other creditors who had RM60b+ owing to them but were offered only RM200m by AirAsia. The court approved the amount after creditors, reportedly eager for new business from the airline, accepted the token settlement.

We learn from the media that the Arbitrator in Paris, France, decided that Malaysia must pay the heirs of the defunct Sulu sultanate US$14.92b (RM62.59b) for stopping the payment of the annual RM5,300 “secession and/or lease” ostensibly since the Lahad Datu intrusion in 2013. See here .

Bank In Manila

It may be coincidental but it was known from gov’t sources at or around the year 2013 that Wisma Putra did not pay the annual RM5, 300 as the recipient account at a bank in Manila had been closed on the grounds of being inactive for quite some time i.e. there being no credit and debit transations.

By law, applicable worldwide, the bank would have to forward any/all monies in the account to the Unclaimed Monies Fund maintained by the Philippines government. The Sulu heirs can claim their previous compensation payments from the Philippines government.

They can also either reactivate the expired bank account or open a new one to collect future compensation payments. Instead, they rushed to an Arbitrator in Paris.

There’s no proof that the Sulu heirs contacted the Malaysian Embassy in Manila in 2013 for an explanation when compensation payments were allegedly stopped by Wisma Putra.

Sandakan Ruling

Again, it was known from gov’t sources, that the nine heirs of the defunct Sulu sultanate and/or their families probably had never touched the money or most of it ever since a 1939 High Court of Borneo Ruling in Sandakan on the matter.

The heirs may have been unhappy with Chief Justice Charles Frederick Cunningham Macaskie Ruling that the “sovereignty of North Borneo rests with the people”. The case in court was only about property rights as reflected in the annual RM5, 300 compensation. In law, North Borneo was no family property as it was not land free of human habitation.

The judge also Ruled — see wikipedia on North Borneo Dispute — on the share entitlement of the claimants. He had considered the Sulu sultan’s collection of toll, along the main waterways, which manifested in the 1878 agreement. The main waterways were from the Pandassan River along the north west coast of North Borneo to the Sibuco River in the south. Contrary to public perception, the Sulu claim to Sabah does not cover the whole of North Borneo (see map of claim).

No proof Sulu claimants collected previous compensation payments from Philippines government.

The Sulu Territorial Claim

Another misconception is that the Sulu claim can be read as territorial. It was riverine property rights i.e. the collection of toll along the main waterways. In Islamic and Arab history, a sultan was the spiritual head of the local ummah, initially democratically elected. The kerajaan sungei (riverine gov’t) was based at the rivermouth. It wasn’t territorial in the western sense of the word, based on Judeo-Christian traditions, in law.

The Agreement was between the Sulu Sultan and the BNBCC. Like the English East India Company which had a Charter over large parts of the Indian subcontinent, the BNBCC had a Charter from the Queen of England to Rule North Borneo on her behalf. The Company abolished toll collection along the main waterways after 1878.

In Malaya, we know from history that the British abolished toll collection along the main waterways and elevated the sultan as territorial Rulers from their previous status as heads of riverine gov’t — kerajaan sungai — confined to the river mouth. The sultanates, surveyed by the British and duly demarcated, were named after the main waterways.

Annual Purses

In compensation, the sultan in Malaya were given annual purses which continue to this day. It was not until Merdeka (Independence) on 31 Aug 1957 that they became heads of state as well. Also, the sultan could elect one among them as Agong (Chief) to wield the sole executive authority of the Federation under Article 39 of the Federal Constitution.

In North Borneo, the BNBCC took a somewhat similar approach with the Sulu sultan but only for annual compensation. The reference point before the Company were the waterways, not territory.

We know from history that the Sulu sultan was not recognised by the Company, and the Queen of England, and was not elevated unlike in Malaya to the status of territorial Ruler in North Borneo. The Sulu sultan was also not recognised by Sabah under the BNBCC as the spiritual head of the local ummah. – New Malaysia Herald

About the writerLongtime Borneo watcher Joe Fernandez keeps a keen eye on Malaysia as a legal scholar (jurist). He was formerly Chief Editor of Sabah Times. He’s not to be mistaken for a namesake previously with Daily Express. References to his blog articles can be found here.

The points expressed in this article are that of the writer’s and do not necessarily reflect the stand of the New Malaysia Herald.