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THE Sabah Law Society (SLS) has emphasised that the Court of Appeal’s decision to grant a stay of execution in the ongoing 40 per cent revenue dispute with the federal government is purely procedural and does not address the underlying constitutional issues at the heart of the case.
“The effect of the order is to preserve the position pending the disposal of the appeal. It does not displace the findings of the High Court,” said SLS president Datuk Mohamed Nazim Maduarin in a statement.
He added that “the substantive constitutional issues, including the interpretation and proper implementation of Article 112D of the Federal Constitution, remain to be determined in the appeal.”
The Court of Appeal earlier allowed Putrajaya’s application for a stay, effectively suspending both negotiations and payment deadlines imposed by the High Court while the federal government pursues its appeal.
Delivering the ruling, Judge Datuk Mohamed Zaini Mazlan observed that the government would “clearly be prejudiced” if required to comply with the High Court’s order before the appeal is heard.
The lower court had mandated both negotiations and payment from the federal consolidated fund within 180 days.
“There would be serious financial consequences for public funds if the application for a stay was rejected pending the appeal,” Zaini added, noting that the “imposed timelines may not give the parties sufficient opportunity to determine the correct quantum payable.”
The appellate court also highlighted the “special circumstances warranting a stay pending the disposal of the appeal,” citing the complexity of calculating Sabah’s entitlement across multiple financial years from 1974 to 2021.
The three-member panel, comprising Zaini, Datuk Ismail Brahim, and K. Muniandy, made no order as to costs.
The stay now suspends the deadlines originally set by the High Court, which had ordered a review within three months and an agreement within six months from October 17, 2025, effectively setting a mid-April timeline for determining the amount owed.
The dispute arose from a judicial review initiated by the SLS, in which the High Court ruled that the federal government had breached its constitutional duty by failing to review and pay Sabah its 40 per cent share of net revenue for the “lost years” between 1974 and 2021.
The court noted that no such reviews had been conducted until 2022.
The SLS confirmed that it would continue to participate in the proceedings “in accordance with the law and the record before the Court.”
Senior federal counsel Ahmad Hanir Hambaly represented the government, while the SLS was represented by David Fung and Jeyan Marimuttu.
Sabah was represented by state Attorney General Datuk Brenndon Keith Soh. - April 6, 2026