Malaysian assets at global risk as late Sultan’s heirs seek $15bn reward

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Sabah residents wave Malaysian flags during Malaysia Day celebrations marking Sabah’s entry into Malaysia, in Kota Kinabalu September 16, 2012. With general elections due within seven months, the Barisan Nasional coalition, in power, has 13 parties in Sabah and the neighboring state of Sarawak on the island of Borneo to extend its 55-year hold on power. Picture taken September 16, 2012. To match Feature MALAYSIA-IMMIGRANTS/ REUTERS/Bazuki Muhammad

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KUALA LUMPUR, July 16 (Reuters) – The heirs of a 19th-century sultanate are seeking to seize Malaysian government assets around the world in a bid to enforce a $14.9 billion arbitration award they won against the Southeast Asian nation, despite the case being suspended. handed down by a French court, their lawyers told Reuters.

In February, a French arbitration tribunal ordered Malaysia to pay the sum to the descendants of the last Sultan of Sulu to settle a dispute over a colonial-era land deal.

Malaysia said on Wednesday that the Paris Court of Appeal had suspended the decision, after concluding that the execution of the sentence could undermine the country’s sovereignty.

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Justice Minister Wan Junaidi Tuanku Jaafar said the stay would prevent the sentence from being enforced as Malaysia seeks to overturn the decision. Malaysia had not previously participated in the arbitration. Read more

Lawyers for the plaintiffs, however, say the February ruling remains legally enforceable outside of France thanks to the New York Convention, a United Nations treaty on international arbitration recognized in 170 countries.

“The ‘stay’ that seems to comfort the Malaysian government is temporarily delaying local execution in one country, France itself,” said Paul Cohen, co-lead solicitor for the heirs, of London law firm 4-5 Gray’s Inn Square. .

“This does not apply to the other 169.”

With a few exceptions, such as diplomatic premises, any property owned by the Malaysian government in countries party to the UN convention is eligible for the purpose of enforcing the award, said Elisabeth Mason, another lawyer for the heirs.

Wan Junaidi, Malaysia’s justice minister, declined to comment when contacted.

ASSETS OWNED BY PETRONAS

The heirs claim to be the successors of the last Sultan of Sulu, who entered into an agreement in 1878 with a British trading company to exploit the resources of the territory under his control – including what is now the wealthy Malaysian state. oil. Sabah, at the northern tip of Borneo.

Malaysia took over the arrangement after independence from Britain, paying a token sum each year to the heirs, who are Filipino nationals.

But the payments were stopped in 2013, with Malaysia arguing that no one else had a claim on Sabah, which was part of its territory.

Last week, the plaintiffs decided to seize two Luxembourg units of Malaysia’s national oil company Petronas (PETR.UL) as part of efforts to enforce the award.

Petronas, which called the seizure “baseless”, said it would defend its legal position, adding that the units had divested their assets. Read more

Lawyers for the heirs said the units were now under the control of bailiffs in Luxembourg, pending a possible appeal from Petronas against the seizure.

“We note Petronas’ description of certain transactions, and we note their statement that those transactions are complete,” Mason said.

“We will uncover the full picture of all assets in due course.”

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Reporting by Rozanna Latiff; Editing by Christina Fincher

Our standards: The Thomson Reuters Trust Principles.

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