Luxembourg court set aside Sulu Sultan heirs' request to enforce $15-B arbitration award

KUALA LUMPUR, Malaysia – Malaysia’s law minister on Thursday, January 26, said a Luxembourg court had set aside an attempt made by the heirs of a former sultanate to enforce a $15 billion arbitration award they won against Malaysia.

A French court last year had ordered Malaysia to pay $14.9 billion to the heirs of the last sultan of Sulu to honor a colonial-era land deal. Malaysia, which did not participate in the arbitration proceedings, maintains the process is illegal.

It obtained a stay against the award’s enforcement in France, but the ruling remains enforceable outside France under a United Nations treaty on international arbitration.

Malaysia’s law minister Azalina Othman Said said the District Court of Luxembourg on Tuesday had set aside a request for an “attachment order” made by the Sulu heirs.

It was not immediately clear what impact, if any, the decision would make on the arbitration award. Azalina did not provide details of the court decision in a statement that described it as a “significant victory” for Malaysia.

Paul Cohen, a lawyer for the heirs of the Sultan of Sulu, said the court ruling had “no bearing on the status of the arbitral award, in Luxembourg itself, or elsewhere.”

“This is a preliminary ruling, on a preliminary measure, in one of several jurisdictions where we are seeking enforcement,” he said in an email to Reuters.

“We have yet to even see the ruling – the same is true of Malaysia – so we’re not sure on what basis Malaysia is seeing fit to comment at this time.”

The Luxembourg court could not immediately be reached for comment.

Last July, two Luxembourg-based subsidiaries of Malaysian state oil firm Petronas were seized by court bailiffs as part of the heirs’ efforts to enforce the award.

Azalina did not say whether the decision was related to the seizure of the Petronas units.

“This decision vindicates the government’s policy to vigorously defend Malaysia in every forum to ensure that Malaysia’s interests, sovereign immunity and sovereignty are protected and preserved at all times,” Azalina said in a statement.

Petronas has said it would contest any claims made on its assets.