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Blow to the Philippine claim
Published on: Tuesday, June 02, 2020
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Kota Kinabalu: The High Court in Malaysia is the proper venue to resolve disputes arising from the 1878 Deed of Cession and not the Spanish courts which do not have authority nor jurisdiction over Malaysia.

High Court Judge Datuk Martin Idang said this when deciding in favour of the Government of Malaysia in its suit against eight of the supposed descendants of the Sultan of Sulu at the Kota Kinabalu High Court on March 17.

He said there is no binding agreement between the Government and the Sultan’s heirs that compels either party to also submit to arbitration in the event of a dispute.

In the Government of Malaysia v Nurhima Kiram Forman & Ors (2020), the purported heirs had on July 30, 2019, commenced ad hoc arbitration proceedings in Spain against the Government of Malaysia and obtained an order from the Superior Court of Justice in Madrid to appoint a sole arbitrator to decide the dispute (the Spanish Arbitration). 

The dispute itself concerns the 1878 Deed of Cession between the then Sultan of Sulu, Baron Overbeck of Austria and Alfred Dent.

The Deed of Cession ceded sovereignty from the Sultan of Sulu over large parts Sabah – from the north-west coast and extending beyond the east-coast as far as the Sibuco River in the South – to Alfred Dent and Overbeck in perpetuity. In exchange Dent, Overbeck and their future heirs were to pay the heirs of the Sultan of Sulu 5,000 Mexican dollars a year (that being the currency of the day).

The actual substance of the Spanish Arbitration was not before Justice Idang. Rather, the issues before him concerned whether the High Court in Kota Kinabalu was the proper court to resolve disputes arising from the Deed of Cession, whether the Deed obliged the parties to resolve disputes through arbitration and whether the Spanish Courts had any authority or jurisdiction over Malaysia.

In his decision, Idang held that there is no binding agreement between the Government and the Sultan’s heirs that compels either party to submit to arbitration in the event of a dispute. Such disputes are to be resolved in the Malaysian courts.

It was also held that Malaysia never renounced its sovereign immunity from foreign proceedings and that the Sulu heirs had already submitted to the jurisdiction of the Malaysian courts.

Idang held that Malaysia is a sovereign nation and no foreign court can have power or jurisdiction over it or the principle of sovereign immunity.

He also held that Malaysia had never consented to having any dispute over the Deed of Cession decided by the Spanish Arbitration and, therefore, the ad hoc proceedings in Spain were vexatious and an abuse of process.

 Most importantly, Justice Idang affirmed a 1939 decision of the High Court of the State of North Borneo (now the High Court in Sabah and Sarawak) which determined that (i) the heirs of the Sultan of Sulu had submitted to the jurisdiction of the North Borneo (now Sabah) courts to resolve disputes arising from the Deed of Cession and (ii) that sovereignty over Sabah was indeed ceded in full and in perpetuity by the Sultan of Sulu, referring to Dayang Dayang Haji Piandao Kiram of Jolo, Phillipines v The Government of North Borneo & Ords (1939). 

This finding makes clear that the Deed of Cession does not contain any right or obligation for the Sulu heirs to resolve disputes with Malaysia through arbitration. It was affirmed that the Malaysian courts are the proper venue for such disputes to be resolved.

The affirmation of Malaysia’s sovereignty over Sabah is timely and strikes a significant blow against the Philippine claim on the State. It is a rare instance when a domestic court is called upon to declare and affirm Malaysian sovereignty over Sabah. The decision also affirms, as a matter of law, that Malaysia has sovereign immunity against foreign proceedings taken out in the courts of another country.

“This case is both timely and welcome. It also raises the question why would the Sulu heirs commence arbitration in Spain? The extent to which Spain could have claimed sovereignty over Sabah and why such a claim is unsustainable as a matter of international law,” he said.

 The basis of a Spanish claim over Sabah originates from the assertion that Spain at the time exercised direct sovereignty over the Sulu Sultanate and all of its dependencies.

 This claim is supported by a series of three treaties entered into between Spain and the Sultan of Sulu in 1737, 1836 and 1851. All three treaties purported to establish Spanish control over Sulu and, in some instances, appear to have ousted the Sultan’s sovereignty.

 It has been suggested that these treaties establish as a matter of law, the capitulation of the Sultan of Sulu to Spanish rule. However, it has also been argued that this simple conclusion is problematic.  As a matter of international law, two things must happen before sovereignty over a territory can change hands. 

 Firstly, the original sovereign (in this case the Sultan) must transfer sovereignty to the new sovereign and this can be done in a number of ways such as by treaty, abandonment or conquest.

 Secondly, the new sovereign must not only accept rule but must also occupy and/or take effective control and possession of the territory in question.

 The issue that arises here is that although Spain signed three treaties with the Sultan, the former never occupied or established administrative authority over the Sultan’s former territories, including Sabah. 

Therefore, it can be argued that Spain, for sheer lack of effort and effective control, allowed Sulu to re-establish its sovereignty over its former territories through the doctrine of continued occupation.

 “This is significant because such delinquency effectively allowed the Sultan re-vest sovereignty over Sulu and consequently, conferred him with sufficient international legal standing with which to enter into future agreements concerning Sabah,” he said.

 Therefore from both a historical and legal perspective, Spain was not sovereign over the Sulu Sultanate in 1878, the date on which Overbeck and Dent took possession of and assumed control over the parts of Sabah controlled by the Sultan (via the Deed of Cession). 

 It shall also be observed that Sulu did not effectively control or occupy Sabah’s interior. 

 Historical references suggest that Sulu only controlled the north-west and east coasts of Sabah and some of the navigable rivers. 

 Sabah’s interior territories were at the time characterised by international lawyers as territorium nullius (nobody’s land). Brunei also asserted a claim over the western regions of Sabah occasioning Dent and Overbeck to enter into a separate treaty with the Brunei Sultan.

 From the perspective of Overbeck and Dent, Spain was not in a position of sovereignty over Sulu. Moreover, Spain did not seek to assert any sovereignty over Sabah, choosing instead to focus its attention on Sulu itself and its nearby islands. 

 Further, Spain by its conduct and a signed 1885 Protocol, effectively disclaimed any sovereign interests over Sabah. Therefore, the only link between the Philippines and Sabah is the Sulu Sultanate.

 It was further argued that neither Overbeck nor Dent were vested with sufficient international legal standing with which to assume sovereignty over Sabah. 

 Neither Dent nor Overbeck were acting as agents for their respective governments when they signed the Deed of Cession. Indeed from the date of signing in 1878 up until 1881, it is argued that the Sultan of Sulu maintained sovereignty over the territories of Sabah that were not territorium nullius.

However, all that changed in 1881 with the grant of Her Majesty’s Royal Charter to the British North Borneo Company.

 The effect of the grant of a Charter to the British North Borneo Company on Sabah was that the territories ceded under the Deed of Cession as well as other parts of Sabah came under British administrative rule.

 This is because the Charter itself placed the British government in control of the British North Borneo Company in respect of its dealings with the Sultan of Sulu, the administration of justice, slavery and other matters related to occupation and rule over Sabah and its territories.

 Idang said in international law terms, this was the point at which Sulu sovereignty was truly extinguished and in its place, British rule and sovereignty established. The British North Borneo Company effectively assumed the position of Dent’s successor in title insofar as the Deed of Cession was concerned (Overbeck by then having been bought out).

 “Thus on its face, the Philippine’s claim to Sabah through its tenuous reliance on Spain and the Sulu Sultanate appears flawed and unstainable.” 

 For even if the Deed of Cession was incapable of bestowing Overbeck and Dent with sovereignty over Sabah, the subsequent grant of a Royal Charter to the British North Borneo Company effectively asserted British sovereignty by way of the doctrine of continued occupation and control.  In short, the link between Spain, Sulu and Sabah was severed by the grant of said Charter.

 Idang said therefore it is curious as to why the Sulu heirs are now attempting to litigate the Deed of Cession in Spain as there is no basis upon which to suppose that Spain ever had a meaningful interest in or connection with Sabah in respect of the Sulu heir’s claim. 

 Further, the argument that the Deed of Cession is a lease and not an abandonment and conveyance of sovereignty is rendered purely theoretical since the proper assertion of sovereign rule began not with the signing of the Deed of Cession but with the establishment of British administrative authority and rule over the territories of Sabah in 1881. 

 Thus the Philippines, as Sulu’s successor in sovereignty, cannot claim the territory of Sabah since such sovereignty had long since been superseded by British rule.

 Hence, the case judicially affirms that sovereignty over Sabah has since 1963, been properly asserted by Malaysia to the exclusion of the Philippines and all others. 


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