KOTA KINABALU: Malaysia has maintained its sovereign immunity in its legal fight against the self-proclaimed heirs of the Sulu sultanate in the European arbitration courts, says Datuk Seri Azalina Othman Said.
The Minister in the Prime Minister’s Department (Law and Institutional Reform) said no state should be subject to the jurisdiction of the court of another state, adding this was a principle recognised under customary international law.
"The Government of Malaysia has been consistently raising timely objections against the claimants' blatant attempt in forum shopping, the jurisdiction of the arbitrator, the continuation of arbitral proceedings despite the Spanish Court’s orders, the unprecedented shift in the seat of arbitration, as well as the delivery of the purported 'final award'," she said.
Azalina was speaking via zoom from Japan in the International Arbitration Colloquium 2023 themed "State Sovereignty and Immunity in Commercial Arbitration" which was held at the Sabah International Convention Centre here on Tuesday (July 4).
She added this frivolous case financed by an international litigation funder, Therium, had raised several alarming concerns, specifically in respect of the exigency to uphold ethical conduct, integrity, professionalism and good practices by arbitrators which is the cornerstone of any legitimate arbitration.
This was fundamental, she said, to preserve the confidence of any parties who chose arbitration to settle their dispute, failing which, could cause the whole arbitration system to be undermined.
"Most importantly, the recent landmark decision by the Hague Court of Appeal rendered on June 27, 2023 is the first decision that rejects the claimants’ attempt to recognise and enforce the purported final award," she said.
Azalina said the decision was unequivocally made based on three grounds, firstly that no final award could have been lawfully rendered due to the annulment of Dr Gonzalo Stampa’s appointment as arbitrator by the Spanish court that appointed him.
Secondly, she added, no valid arbitration agreement existed and lastly the exceptional stay of enforcement of the purported final award in Paris renders the sham award incapable of recognition and enforcement in the Netherlands.
"It is hoped that the success obtained through the Hague Court of Appeal decision will contribute to subsequent successes in ongoing proceedings commenced by the government in challenging the recognition and enforcement of the purported final award in other jurisdictions, including in Luxembourg.
"Keeping in mind the successive victories achieved by Malaysia, the government remains devoted to our legal pursuits in ensuring that the purported final award will be eventually annulled by the Paris Court of Appeal.
"Rest assured that we will not succumb to any of the unscrupulous enforcement tactics utilised by the claimants.
"This would include taking the necessary legal actions in certain identified jurisdictions against Therium, that is known to assist the claimants in commencing this sham arbitration and to ultimately end the enforcement of the illegal awards," Azalina said.
She said the unity Madani Government would also legislate a State Immunity Act with the purpose of codifying the principle of state immunity as part of Malaysian law to reflect Malaysia’s effort to ensure the sovereignty of states were protected, in the event of similar frivolous claim was brought against those states before the courts of Malaysia.
This law, she explained, would reflect the general principles of international law on sovereign immunity, including effective service on foreign states, to uphold the rights and interest of parties concerned, safeguard the sovereignty of states and to preserve and promote friendly relations with other states.
"With this, it is hoped that reciprocal treatment will be accorded to Malaysia in the event Malaysia is brought to the courts of a foreign state in the future," she said.
