Sabah 40% revenue entitlement: Court of Appeal sets Nov 12 to fix decision date on Federal Government’s appeal against High Court ruling
KOTA KINABALU: The Court of Appeal here today set Nov 12 for case management to fix the date of its decision on the Federal Government’s appeal against a High Court ruling on Sabah’s 40 per cent revenue entitlement.
A three-member panel led by Justice Datuk Azhahari Kamal Ramli deferred the decision after hearing more than three hours of extensive submissions from the appellant, the Federal Government, and the respondents, the Sabah Law Society (SLS) and Sabah State Government.
The panel, which also comprises Justices Datuk Ahmad Kamal Md Shahid and Datuk Amarjeet Singh, is hearing the Federal Government’s appeal against the High Court’s mandamus order directing both governments to conduct a review and reach an agreement on the special grant for the period from 1974 to 2021.
“We are not in a position to decide this afternoon. We need time to consider the submission. We will set a case management to fix a decision date,” Justice Azhahari Kamal said before adjourning the proceedings. The case management will be held via the e-Review system.
At the outset, senior federal counsel Ahmad Hanir Hambaly @ Arwi clarified that the Federal Government is not disputing Sabah’s constitutional right to the 40 per cent formula under Article 112C, nor its right to a review under Article 112D.
He emphasised that the appeal is strictly aimed at quashing the High Court’s finding that the Federal Government breached the Constitution between 1974 and 2021, and its subsequent decision to invalidate the 2022 Review Order.
Meanwhile, SLS’ counsel David Fung justified the society’s locus standi to drive the public interest litigation, emphasising that they are seeking the Court’s intervention because it is the “guardian of the Constitution”.
Fung contended that the Sabah State Government had merely “reserved its rights” for decades without taking legal action, compelling a civil society to seek the court’s intervention on behalf of the people of Sabah.
Sabah State Attorney-General Datuk Brenndon Keith Soh addressed the bench’s questions about why the state never triggered the constitutional provision to appoint an independent assessor during those “lost years.”
Soh explained that the mechanism for appointing an independent assessor under Article 112D(6) of the Federal Constitution can only be activated when a deadlock occurs during an ongoing, formally convened review.
The mechanism, he argued, was therefore never triggered, as the Federal Government had failed to conduct the mandatory review in 1974 in the first place.
“Because the Federal Government failed to hold the mandatory 1974 review in the first place, the constitutional prerequisite to appoint an assessor was never met, leaving the state without a legal avenue to trigger the deadlock mechanism,” he said.
On Oct 17, 2025, the Kota Kinabalu High Court ruled in favour of a judicial review filed by the SLS, declaring as unconstitutional the Federal Government’s failure to conduct mandatory reviews of Sabah’s special grant since 1974.
The High Court also ordered the Federal Government to hold a review with the Sabah State Government within 90 days and to reach an agreement within 180 days on Sabah’s 40 per cent special grant entitlement for the period from 1974 to 2021.
The Federal Government subsequently appealed the ruling, obtaining a stay of execution from the Court of Appeal on April 6, 2026, suspending immediate payouts and implementation deadlines pending the outcome of the appeal.
