Nobumichi Teramura and I are publishing this article (open-access) in volume 42 of Arbitration International (2026) as a sorry saga, but far from a representative case, of what can go wrong with long-term investment contracts containing dispute resolution clauses in Asia. The Abstract is below and Powerpoints summary here.
Abstract: This article tracks the ongoing saga of the claim brought by heirs of the Sultan of Sulu against Malaysia as successor to the British North Borneo Company, based on a concession agreement in 1878. After outlining the complex colonial-era history, and the dispute after Malaysia suspended concession payments in 2013 (Section 2), Section 3 details ad hoc arbitration proceedings commenced in Spain in 2017. This phase includes the 2019 court appointment of the arbitrator and then his removal, as well as issuance of a 2020 preliminary award on jurisdiction and applicable law (the UNIDROIT Principles) followed by its annulment, alongside a Malaysian court’s anti- arbitration injunction in 2020. Section 4 explains attempts to move the seat to France and enforce awards there, including the 2022 Final Award of around USD 15 billion (Section 5), before the 2023 criminal conviction of the arbitrator by Spanish courts (Section 6). The heirs have attempted nonetheless to enforce the Final Award against Malaysian assets in the Netherlands and Luxembourg, unsuccessfully (Section 7). The heirs also commenced an arbitration in 2024 under the 1993 Philippines—Spain bilateral investment treaty, notably alleging denial of justice in Spanish courts, and failed (Section 8). The Sulu saga raises significant conceptual and practical issues in international arbitration, raising public scepticism about its legitimacy (including costs and delays) beyond Malaysia.
