Arbitral victory of the Sultan of Sulu | Inquirer Opinion
With Due Respect

Arbitral victory of the Sultan of Sulu

The descendants of the Sultanate of Sulu, who were awarded nearly $15 billion by a Paris-based Arbitration Tribunal, bemoaned the brushing off by former press secretary Trixie Cruz-Angeles of their victory as merely “a private claim” that did not involve the Philippine assertion of sovereignty over North Borneo, otherwise known by its current name, Sabah.

MOREOVER, SOLICITOR GENERAL MENARDO I. GUEVARRA was quoted as saying that he was “carefully studying the legal and constitutional implications, if any, of the arbitral award…” thereby leading Amina Rasul, the erudite and vigilant president of the Philippine Center for Islam and Democracy, to lament, “I would have thought that our government would be more supportive of the win” and in helping collect the award.

To be sure, there are two distinct claims involving Sabah: (A) the public sovereignty claim of the Republic of the Philippines that Sabah is a part of our national territory in the same way that Sulu and Mindanao are, and (B) the private proprietary claim of the heirs that arose from the lease of Sabah by the Sultan to Malaysia.


THOUGH DISTINCT IN THEIR LEGAL NATURE, both claims arose from the same set of facts, as follows:


(1) Sabah was originally ruled by the Sultan of Brunei who, in 1704, ceded the territory to the Sultan of Sulu in gratitude for the help extended by the latter in suppressing a revolt.

(2) Over the years, various European countries, including Britain, Spain, and the Netherlands acknowledged the Sultan of Sulu as the sovereign ruler of Sabah as they entered into various treaties with him, an acknowledgment disputed by Malaysia.


(3) In 1878, Baron de Overbeck, an Austrian “adventurer,” persuaded the Sulu Sultan to lease to him the territory in question for the equivalent of about $1,000. Thereafter, Overbeck sold all his rights to Alfred Dent, a British merchant, who formed the British North Borneo Company to which he, in turn, ceded his right and obligations under the 1878 contract.

(4) Thereafter, the British Company transferred all its rights and obligations to the British Crown. In turn again, the Crown, on July 10, 1946—just six days after the Philippines was “granted independence” by the United States—asserted full sovereign rights over North Borneo.

(5) In the early 1960s, the Philippines filed its claim of sovereignty in the United Nations on the argument that Overbeck and Dent, not being sovereign states, could not have acquired and transferred sovereign rights over Sabah to the British Crown, which, in turn, could not have later ceded said rights to Malaysia when it gained independence on Sept. 16, 1963. In the same way, Malaysia argued that the Sultan of Sulu was no longer a sovereign when he allegedly transferred his territorial rights to the Philippines.

(6) The Philippine sovereignty claim was put on the “back burner” because of many intervening events, including Malaysia’s pivotal role in the Mindanao peace process. Meanwhile, a referendum was conducted that allegedly showed the overwhelming desire of the Sabah inhabitants to remain under Malaysia. The Philippines belittled this referendum because the residents were not given the untrammeled freedom to choose.

(7) On the other hand, the proprietary claim of the “Heirs to the Sultanate of Sulu v. Malaysia” arose from the lease agreement (Malaysia refers to it as a “cession” payable in installments) entered into by the Sultanate with Overbeck, an agreement that was passed on to Dent, then to the British North Borneo Company, then to the British Crown, and finally to Malaysia that, significantly, continued to pay faithfully the annual $1,000 fee.

HOWEVER, IN 2013, MALAYSIA STOPPED PAYING. Seeking compensation and damages for the breach of the 1878 contract, the heirs filed the arbitration case in the tribunal that used the United Nations Commission on International Trade Law (or Uncitral) Arbitration Rules of 2010 in its proceedings.

On Feb 28, 2022, despite Malaysia’s refusal to participate in the proceedings, sole arbitrator Gonzalo Stampa ruled, among others, that the 1878 agreement was indeed breached by Malaysia; and that, as a consequence, Malaysia must pay the heirs $14.92 billion representing the “restitution value of the rights over the leased territory” with 10 percent interest thereon, plus all “legal and expert costs.”

At bottom, while I fully sympathize with the heirs, I do understand SolGen Guevarra’s need to study the constitutional and legal ramifications of the proprietary award given that the Philippines has not abandoned its sovereignty claim. So, too, the proprietary award may affect our friendly ties with Malaysia. Hence, he wants to consult the Department of Foreign Affairs, and of course, the President. He may also want to know how the $14.92 billion was computed, and to dig into reports on the supposed faults of sole arbitrator Stampa that may affect the validity of the award. Knowing the skill and patriotism of the SolGen, I am sure he will come out with a learned stand in the near future.

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TAGS: Menardo Guevarra, Sultan of Sulu, Sultanate of Sulu, With Due Respect

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