Award of US$14.92 bln to Sultan Sulu Heirs Nullified As Spanish Court Rejects Appeal To Retain Stampa’s Appointment As Arbitrator

File photo of Law Minister Datuk Azalina Othman Said.

PUTRAJAYA, Feb 2 – Malaysia has achieved a significant success at the Spanish Constitutional Court against the claims made on the territory of Sabah by a group of individuals claiming to be the heirs of the Sultan of Sulu (Claimants).

In a press statement issued here today, Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Azalina Othman Said, the government had just received confirmation that the Spanish court had rejected the extraordinary constitutional appeal (recurso de amparo) filed by the Claimants against the annulment of Stampa’s appointment as arbitrator in the dispute.

Stampa, who was appointed in 2019 by a Madrid court as an arbitrator in the case of the Claimants’ claims on Sabah territory, had made a significant preliminary award to the Claimants in court.

With the annulment of Stampa’s appointment (which was already final and binding) confirmed by the Spanish Constitutional Court, the position of Malaysia on the case has been reaffirmed, the minister said.

On 29 June 2021, the High Court of Justice of Madrid (HCJM”) issued a decision which annulled the unlawful judicial appointment of Stampa to act as an arbitrator (“Annulment Decision”). The HCJM was the Spanish court that had initially appointed Stampa in 2019 (without hearing Malaysia following invalid service). As a result of this decision, the HJCM retroactively invalidated Stampa’s appointment and nullified all his actions as a purported arbitrator, including the alleged “preliminary award” he had rendered in Madrid.

The decision of the HCJM was final, binding and directly enforceable and could only be subject to an extraordinary constitutional appeal before the Spanish Constitutional Court if exceptional circumstances were met. In fact, the Claimants complied with the Annulment Decision of the HCJM and took steps to appoint a different arbitrator. As a consequence, they recognised that Stampa was not an arbitrator.

On Nov 5 2021, the Claimants filed a constitutional appeal seeking that the 29 June 2021 decision be overturned. The Spanish Constitutional Court has rejected the constitutional appeal filed by the Claimants because they had withdrawn their claim to appoint an arbitrator following the Annulment Decision and, as a result, they had voluntarily abandoned the proceedings which served as the basis for their constitutional appeal.

As a result of the annulment of Stampa’s judicial appointment in Spain, he lacked the authority to act as an arbitrator and should have immediately put an end to the purported arbitration proceedings.

Instead, and in open defiance of the 29 June 2021 decision of the HCJM (the same court that had initially appointed him as an arbitrator), Stampa nevertheless chose to deliver an illegal and purported “final award” granting the Claimants US$14.92 billion in compensation for the territory of Sabah.

Malaysia subsequently availed itself of all available legal remedies to invalidate Stampa’s two purported awards.

The Spanish court’s decision to retain the annulment of Stampa as arbitrator confirms the legal position that Malaysia has asserted since the dispute began, effectively ending the Claimants’ judicial strategy in Spain, the minister said.

The French courts have stayed the enforcement of the purported final award rendered by Stampa in France, pending the judicial outcome of Malaysia’s action to set it aside on the basis that enforcement may likely threaten Malaysia’s sovereignty over the territory of Sabah. Furthermore, the Luxembourg courts have recently set aside the attachment obtained by the Claimants on the basis of Stampa’s two purported awards.

The Spanish courts have now further confirmed the annulment of Stampa’s unlawful appointment as an arbitrator, finding that he never had any legal authority to act in that capacity nor to issue any awards and that therefore they are null and void.

This recent decision of the Spanish Constitutional Court vindicates the Government’s policy to vigorously defend Malaysia in every court and forum, exercising all its powers, rights and resources to ensure that Malaysia’s interests, sovereign immunity and sovereignty are protected at all times, Azalina said.