Spanish arbitrator who issued controversial US$14.9B award against Malaysia to face charges on 11 Dec

MALAYSIA: The Spanish arbitrator Gonzalo Stampa, who controversially ordered Malaysia to pay US$14.92 billion to the purported “descendants” of the last sultan of Sulu, is set to face charges in the Madrid Court on December 11.

Datuk Seri Azalina Othman Said, Malaysian Minister in the Prime Minister’s Department (Law and Institutional Reforms) told the Malaysian state media Bernama that the Madrid Court, following its own investigations, has filed criminal charges against Stampa.

If found guilty, he could face both imprisonment and fines.

Azalina emphasized in an online press conference from London on Thursday (9 Nov) that the hearing date resulted from persistent demands by the Malaysian government.

“This is not a civil case but Stampa is facing criminal charges. This is the main factor that offers consistency in Malaysia’s claim that the award by Stampa as the international arbitrator is an illegal act that is baseless.”

Azalina, currently in London, is meeting with lawyers appointed by the Malaysian government to contest the third phase of territorial claims by eight Philippine citizens who assert themselves as the legal heirs of the Sulu Sultanate.

The goal is to secure a comprehensive defeat for the claimants and their funders.

Madrid High Court nullifies Stampa’s judicial appointment in June 2021

According to Azalina, Stampa’s controversial award of US$14.92 billion is considered a ‘fraud award’, as the High Court of Justice of Madrid annulled Stampa’s judicial appointment in June 2021.

Despite this decision, Stampa continued to preside over the arbitration case, lacking the authority to do so. He later relocated the seat of arbitration to Paris in February 2022, where he issued the award against Malaysia.

Azalina highlighted the significance of the criminal case against Stampa on December 11, stating that it could potentially annul all awards made by Stampa.

The Malaysian government, acting as the complainant, will be represented during the proceeding, and a guilty finding could strengthen Malaysia’s argument that the US$14 billion award is unlawful.

Malaysia is actively working to annul the US$14.9 billion award, with recent legal developments on November 6, where the French Court annulled the order to mortgage a Malaysian Diplomatic building in Paris, and on November 9, recording the withdrawal of claims to seize Malaysia’s Diplomatic Buildings by the Sulu Group.

According to a Press statement issued by Azalina on Thursday, the Paris Court of Appeal refused the recognition and enforcement of the partial award on June 6, this year, and the enforcement of the final award has been stayed pending the outcome of annulment proceedings.

“In light of these developments, the Government of Malaysia is confident that the ultimate annulment of the purported final award by the Paris Court of Appeal is only a matter of time, and is making every effort to secure that result as quickly as possible. ”

In a Facebook post on Thursday, Azalina shared that there are crucial decisions expected in the upcoming weeks. Despite Malaysia receiving favourable rulings in the Sulu Claim from courts like the Luxembourg Court and The Hague, threats to the country’s sovereignty persist.

The Sulu Claim case is scheduled to be heard in the Paris Court on November 16, 2023, and in the Madrid Court on December 11.

“Do not challenge Malaysia’s sovereignty. The government will take every action to defend our sovereignty and every inch of our homeland from external threats. This is my promise and the promise of the Malaysian government,” she remarked.

Historical background

The self-proclaimed “successors-in-interest” to Sultan Jamalul Kiram II, initiated a claim against the Malaysian government through an international arbitration proceeding in Madrid, Spain since 2018.

In March last year, the French arbitration court instructed the Malaysian government to pay the Sulu Sultan’s heirs.  In July 2022, two Luxembourg-based subsidiaries of Petronas were seized by court bailiffs as part of the heirs’ effort to claim the award.

The Spanish arbitrator Gonzalo Stampa, reasoned that Malaysia had reneged on the 1878 agreements between Sultan Mohamet Jamal Al Alam (the then Sultan of Sulu) and Baron de Overbeck and Alfred Dent, representatives of the British North Borneo Company.

Sultan of Sulu granted sovereign rights to parts of Sabah today, in return for an annual RM5,300 token payment.

In 1936, the payment temporarily ceased when the last formally recognised sultan of Sulu, Jamalul Kiram II died without heirs.

The payment resumed only after North Borneo High Court Chief Justice Charles F Macaskie named nine court-appointed heirs in 1939.

Malaysia government took over these payments after the formation of the country in 1963 until Datuk Seri Najib Razak administration halted the payment in 2013 when more than 200 armed militants, believed to be linked to the Sulu Sultanate, invaded Lahad Datu and resulted in 78 deaths.

The Malaysian government had claimed that the armed incursion caused a breach of the 1878 agreement, which the heirs of Sulu Sultan disputed.