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I REFER to your report, "Sulu claimants’ demands against Malaysia baseless".
While the experts say that the claims of the Sulu heirs against Malaysia “will never be in their favour as Malaysia is a sovereign nation”, Malaysia’s landmark victory at the Paris Court of Appeal does not turn on the issue of the sovereignty of the country, which according to Assoc Prof Mohd Samsudin, who chairs the Research Centre for History, Politics and International Affairs, Universiti Kebangsaan Malaysia, can never be challenged by any party because it was recognised by the United Nations during Malaysia’s formation in 1963.
Instead, it turns on the construction of a single clause in the 1878 agreement.
After the Paris Court of Appeal ruled that it could review the decision of the arbitration tribunal on its jurisdiction, whether it was competent or otherwise, the court said that under a substantive rule of international arbitration law, an arbitration clause is legally independent of the main agreement that contains it, directly or by reference.
Whether a clause is an arbitration, it is to be assessed according to the common will of the parties, which alone invests the arbitrator with his jurisdictional power without it being necessary for him to refer to state law.
In the Sulu heirs’ case, the arbitration tribunal was constituted on the basis of a clause inserted in the 1878 agreement.
The parties disagreed on the meaning and scope of this stipulation, written in Jawi, from which they produced different translations.
The Sulu heirs relied on a French translation, which stated as follows:
“Furthermore, if a dispute subsequently arises, any dispute between us, our heirs, and our successors, with Lord Gustabus Baron of Uberbek or his company, we, of the two parties, would submit this matter to the examination and to the decision of the Consul-General of Her Majesty the Queen in the country of Brunei.”
Malaysia, for its part, produced an English translation, which was in fact retained by the Stampa arbitrator as a reference in the award. The translation is as follows:
“Should there be any dispute, or reviving of all grievances of any kind, between us, and our heirs and successors, with Mr Gustavus Baron de Overbeck or his Company, then the matter will be brought to the consideration or judgement of Their Majesties’ Consul-General in Brunei”
An English translation made in 1878 by Acting Consul-General W. H. Treacher, who took part in the negotiations and signed the agreement as a witness, reads as follows:
“If, in the future, any dispute shall arise between us, our heirs and successors, and Gustavus Baron de Overbeck, or his Company, we both will refer it for the decision and concept of the Queen’s Consul-General in Brunei.”
The court found it necessary to seek the common will of the parties in light of:
- the principle of interpretation of agreements in good faith, so as not to allow one of them to withdraw from commitments freely consented to but clumsily expressed, and
- the principle of useful effect, according to which when the parties insert an arbitration clause in their agreement, it must be presumed that their intention was to establish a mechanism effective for the settlement of disputes covered by the arbitration clause.
From the various versions cited above, it could be seen that they all concur on the point that the parties wished to appoint a third party to the agreement to hear any dispute arising from the agreement between them or their successors.
The consul-general of the British Crown in Brunei was clearly designated to hear disputes, if any. He was indeed a third party to the agreement. It could not be denied that the consul-general was the designated independent third party, with Great Britain not being party to the agreement on its date of conclusion.
The choice of the consul-general of the British Crown stationed in Brunei to hear any dispute was a key element of the willingness of the parties to resort to the holder of the office in 1878, who maintained relationships of trust with the parties, having taken an active part in the negotiations and signed the agreement, after inciting the sultan of Sulu to submit, in case of dispute, to the decision of the said consul-general.
The court accordingly ruled that the clause reveals “the will of the parties to invest the consul-general of the British Crown with the jurisdictional power to settle any dispute arising between them or their successors, excluding recourse to national courts, to which the function of consul-general cannot be assimilated”.
However, given that the office had been dissolved, it rendered the disputed clause inapplicable and obsolete. This was reinforced by the fact that in 1946, Sabah – then known as the State of North Borneo – was transformed into a British colony, so a British consul could not, from that date on, be regarded as an independent third party.
Under these conditions, a new agreement between the parties was necessary. With no agreement having been reached, despite renegotiation attempts after 1946, the clause became impossible to implement.
The arbitrator, Stampa, could not therefore validly declare himself competent to hear requests made by the Sulu heirs.
Be that as it may, the decision is a massive one. It remains to be seen, though, whether courts in other countries will refuse enforcement of awards that have been set aside at the seat of the award.
It is said that the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards does not oblige contracting states to refuse enforcement of awards that have been set aside at the seat.
Malaysia must stay vigilant. It must be argued that an award annulled by reason of the incompetency of the arbitrator has no legs to stand.
The award must remain annulled and not be recognised or enforced in any country. – The Vibes, June 16, 2023
Hafiz Hassan is a reader of The Vibes
