Typically, the arbitration agreement will appear as a clause in the contract between the parties in dispute.  Unlike a domestic court, which is conferred by domestic law the power and jurisdiction to resolve civil disputes between persons (including companies and corporations) within its territorial limits, which means there is no question of refusing to consent to a court’s jurisdiction over such a dispute, arbitration proceedings require consent. 

By definition, it is consensual.  The parties must freely and voluntarily agree in writing in clear terms to submit their dispute to arbitration.  Absent a written arbitration agreement, arbitration is not available. It cannot be imposed. Thus, how Stampa construed the relevant sentence in the 1878 Grant (which is the relevant operating contract) as an arbitration clause is absolutely beyond belief.  

In an article entitled “The Sultan of Sulu Award: Is it enforceable in the US under the New York Convention?” published in the ITA in Review [2022] Vol 4, Issue 1, arbitration specialists Gary J Shaw and Rafael T Boza observed:

“The Award against Malaysia is one of the largest awards ever issued against a state, surpassed only by the Yukos Award. It arises out of a 150-year-old contract with very ambiguous terms. It was issued in the context of a highly disputed ad hoc arbitration, in which neither the alleged arbitration clause, nor the conduct of the proceedings was accepted by the parties or the courts of the seat, Spain. The Arbitrator took actions which may be considered unreasonable, extreme, or even defiant, such as relocating the seat of arbitration, to ultimately issue a polarizing Award. Any enforcement effort, in any jurisdiction, will likely be met with substantial resistance.”

Spanish and French arbitrations

Malaysia applied to set aside all rulings from the Superior Court of Justice of Madrid, including its appointment of Stampa.  In June 2021, the  Spanish court found in favour of Malaysia, and set aside all the Superior Court’s prior decisions against Malaysia. 

The Superior Court then directed Stampa to close the proceedings immediately, pursuant to its setting aside order.  Stampa, clearly a rogue operator, disobeyed claiming that the court’s intervention was not allowed under the Spanish Arbitration Act.

The Sulu claimants then shifted their case to France.  They applied before a Court in Paris, which granted their application to permit Stampa to relocate the seat of arbitration from Spain to France. 

Stampa stated in his Award that the decision of a court of his nation (Spain) constituted “unauthorised intrusions by local courts” in the proceedings that created “a certain risk for the Parties of incurring in a denial of justice in Madrid”.  As a result of the Paris Court Order, the proceedings were relocated to France in October 2021.

In December 2021, Malaysia appealed against the order of the Paris Court to the Court of Appeal.  The French appellate court stayed the order of the lower court.  Malaysia sent the order of the French court to Stampa, and requested that the arbitration be discontinued immediately.  Again, Stampa rejected Malaysia’s request. 

Stampa went ahead to issue his Final Award on Feb 28, 2022, in flagrant disobedience of the decisions of the Madrid and Paris Courts.  Malaysia immediately challenged this Award in the Court of Appeal in Paris. 

As a result of the seizure notice, Malaysia’s application to suspend the enforcement of the award in France was granted. That seems to represent the present position. 

In parallel, the Malaysian Ambassador lodged a complaint against Stampa with the Spanish authorities.  The Spanish Public Prosecutor filed a criminal complaint against Stampa for serious contempt of court and professional intrusiveness.  The Criminal Court of Madrid has commenced a criminal investigation in relation to these complaints.

It must be emphasised that the appointment of Stampa as sole arbitrator was made by a court in Spain.  However, as stated earlier, this is contrary to the express provisions of the 1878 Grant, which is the sole and exclusive basis of the dispute by the Sulu Claimants. 

Further, the application was made without proper service on Malaysia.  Likewise, the alleged transfer to France was made “ex-parte” and without consent from Malaysia:  the courts of Paris too have no jurisdiction under the 1878 Grant to determine the dispute.   

Legally unsustainable claim by the Sulu Claimants

In rejecting Malaysia’s offer for all arrears and interest totalling RM48,230 as set out in my letter dated Sept 19, 2019, Paul Cohen, Counsel for the Sulu claimants in his reply letter dated 21st October 2019 set out as follows the claim that the Sulu claimants were pursuing in the Spanish arbitration:

“There remains the issue of the unconscionable imbalance between the annual payment amount and the actual value of the territory, in light of the unanticipated discovery and development of certain substantial natural resources (hydrocarbons, crops and others).  That is the heart of the dispute.  The quantum of your suggested payments to my clients is frankly derisory in comparison to the actual value of their claim.”

However, the 1878 Grant contains no right for the claimant to make such extravagant, unsustainable claims in law if a breach of contract on the part of Malaysia occurs.  “The actual value of the territory”, viz, the market value in 2022 of the lands ceded to the North Borneo Company in 1878 can never be the subject of any claim by the Claimants. 

It is hopelessly remote and scandalously opportunistic by any yardstick.  As I previously mentioned, title, ownership and sovereignty of the lands ceded in 1878 passed at the date of the Grant, and never belonged to the Sultan of Sulu from Jan 22, 1878.  Hence, any claim thereafter to the land is not sustainable in law. 

No such claim was made for the next 130 years; it surfaced for the first time in the Spanish arbitration.  It is a claim that has no basis in fact or law. What the Sulu claimants are demanding is a unilateral re-writing of the 1878 Grant.  No doubt Stampa, when awarding US$14.9 billion in his Award, re-wrote the terms of the 1878 Grant.

Sovereign immunity

“State Immunity” is a well-established rule of customary public international law whereby countries cannot be sued in the domestic courts of other countries against their will.  The 1878 Grant was not a commercial agreement, but an act of a sovereign to cede territories.

Accordingly, as a sovereign, independent nation, Malaysia is immune from the jurisdiction of the Courts of Spain and France.  As stated by Lord Wilberforce in the House of Lords’ case in  I Congreso Del Partido [1983] 1 AC 244:

“It is necessary to start from first principle. The basis upon which one state is considered to be immune from the territorial jurisdiction of the courts of another state is that of "par in parem" which effectively means that the sovereign or governmental acts of one state are not matters upon which the courts of other states will adjudicate.”

Arbitral imperialism

There is an underlying but unmistakable imperialist arrogance in the actions of Stampa as well as the French and Spanish Courts in purporting to exercise jurisdiction over the Government of Malaysia.

There is similarly an imperialist arrogance in these courts not immediately accepting that this dispute is clearly and unambiguously for the High Court of Sabah. The Malaysian government rightly rejected the validity of the arbitration from the outset and rightly rejects the validity of Stampa’s arbitration award. 

It should deeply trouble anyone who values our sovereignty and our hard-fought independence from the clutches of the British Empire that courts and arbitrators from former European colonial powers consider it appropriate to impose their jurisdiction upon us against our will. Just try to imagine for one second if the roles were reversed.

It is further deeply troubling that one rogue operator, acting in breach of orders from a superior court within his own country, has been able to issue a multi-billion dollar award against the government of Malaysia, one of the largest awards ever issued against a state. It is particularly outrageous because the basis of that multi-billion dollar award is an alleged breach of a contract worth only RM5,300 per annum. 

Actions against Stampa and Cohen

The wholly unacceptable conduct of arbitrator Stampa and the US lawyer for the Sulu claimants, Paul Cohen, which borders on unlawfulness, cannot be allowed to persist without Malaysia taking steps against them personally in their home jurisdictions. 

The Sulu claimants themselves would not have the legal expertise to engage in this litigation war.  The litigation funders, Therium, have apparently incurred costs in excess of US$10 million including staggering awards of costs in the sum of US$2.79 million to Cohen and US$2.33 million to Stampa.  But the legal masterminds who have personal and direct responsibility for attacking Malaysia are Cohen and Stampa. 

Thus in the case of Cohen, Malaysia should lodge a complaint against him with the disciplinary body for barristers in England where he practises, namely, the Bar Standards Board in England.  The highest standards of integrity and professionalism are expected of the senior legal profession in England, the Bar; Cohen has certainly run foul of them. 

In the case of Stampa, Malaysia should lodge a complaint against him with the regulatory authority over arbitrators in Spain.  If there is none, we should seek legal advice from leading lawyers practising in Spain on our recourse under Spanish law against this rogue arbitrator.

Additionally, Malaysia must seek “in personam” injunction orders against both Stampa and Cohen in both the courts of Spain and France restraining each of them, acting directly or indirectly, on the purported arbitrations in any part of the world. 

In Spain, I believe Stampa has already been restrained; a similar order against him relocating his unlawful arbitration must also be secured in France.  Likewise, against Cohen.

Malaysia must investigate how the insurance funder, Therium, agreed to fund such a hopeless case in law, insofar as the quantum of compensation lawfully payable to the Sulu claimants, is concerned. 

We must seek advice from the best barristers in London (on the assumption Therium carries on business in the United Kingdom) on whether Malaysia can seek an injunction against Therium restraining it from further funding.  Once the money flow ceases, amazingly the rogue arbitration activities will cease.

I am happy that Malaysia has commenced criminal proceedings against Stampa; that too must be pursued concurrently, as we pursue the new strategies that I have outlined.  We must recognise that this is legal imperialism by certain European powers and personalities; we must therefore defend our national sovereignty and territorial integrity with all our strength. 

Attack is the best form of defence; and Malaysia must go on the offensive against Stampa, Cohen and Therium.  Merely applying to set aside the unlawful arbitration award of Stampa is insufficient.  Other punitive measures must be undertaken urgently by Malaysia.

It will be recalled that the relevant party to the 1878 Grant is the government of Malaysia, as a successor-in-title.  The party that was taken, albeit wrongly, to arbitration by the Sulu claimants was also the government of Malaysia, initially in Spain, and then in France.  The US$14.9 billion award was made against the government of Malaysia. 

It is well-settled law, and certainly something that Cohen should know, that only the assets of Malaysia can be the subject of attachment or execution to satisfy the award.  Cohen should know that Malaysia enjoys “state immunity” in all the domestic courts of every nation where Malaysia’s assets are situated. 

In order to overcome this insurmountable hurdle, Cohen abuses the law further by attaching the assets of subsidiaries in Luxemburg belonging to Petronas.  But Petronas is a separate entity from Malaysia.  The award does not bind Petronas, and cannot be enforced against the assets of Petronas. 

The greed of Cohen knows no bounds; abuse of well-settled legal principles of universal application does not seem to trouble this American barrister of ill repute.  

Enforcement of arbitration awards under the New York Convention

In Dallah v. Government of Pakistan [2011] 1 AC 763, a private party, in reliance on the New York Convention, sought to enforce in the Courts of England an arbitration award made in France by a panel of three arbitrators, which would have then entitled the party, the Plaintiff to execute against the properties belonging to Pakistan in England. 

The government of Pakistan refused to take part in the arbitration proceedings in France because it alleged that there was no valid arbitration agreement between Pakistan and the plaintiff which meant that the arbitrators had no jurisdiction to determine the alleged dispute. The tribunal nevertheless decided that it had jurisdiction, and made an award against Pakistan. 

Only when the plaintiff attempted to enforce the award in England, did Pakistan contest the matter for the first time in the English courts.  Lord Mance, in delivering the judgment of the apex court in the United Kingdom, the Supreme Court, stated:

“….it is well established, and indeed was common ground, that a person against whom an award has been made is not bound to challenge it before the supervisory court in order to challenge its enforcement in another jurisdiction.

“An arbitral tribunal’s decision as to the existence of its own jurisdiction cannot therefore bind a party who has not submitted the question of arbitrability to the tribunal …. a party who has not submitted to the arbitrator’s jurisdiction is entitled to a full judicial determination… before the English Court.

“The very issue is whether the person resisting enforcement had agreed to submit to arbitration in that country. Such a person has … no obligation to recognise the tribunal’s activity or the country where the tribunal conceives itself to be entitled to carry on its activity. …”

The Supreme Court decided that there was in fact no arbitration agreement, and refused to enforce the invalid award against Pakistan.

Hence, Malaysia’s decision not to participate in the arbitration proceedings before Stampa was based on high legal authority.  Indeed, participation would amount to conceding the existence of an agreement to arbitrate and conferring legitimacy to an illegal body. 

In any event, having regard to the outrageous decisions by Stampa, even if Malaysia had argued before him that there was no arbitration agreement, he would have ruled against Malaysia. 

And Malaysia would have incurred massive costs to pay him and our Spanish lawyers.  Most importantly, neither the Spanish nor the French Courts barred Malaysia from challenging enforcement because of non-participation before Stampa.

Is a special task force necessary?

The arbitration proceedings begun by Cohen and fully supported by Stampa in Spain and France constitute not just legal misconduct of the worst kind, they are part and parcel of the international arbitration circuit gone mad.  It brings into disrepute a system which is Mafia-like, controlled by European lawyers abusing the legal systems of their countries, and the arbitration world to the detriment of Third World countries, like Malaysia. 

It is a highly specialised and technical area of legal practice.  Hence to handle the matter, I had the assistance of lawyers from the Attorney-General’s Chambers, from the Bar in Malaysia and Spanish barristers appearing in the courts of Madrid.  I have no doubt that barristers appearing regularly in the courts of Paris were appointed by Malaysia when the dispute transferred to France.

Hence, the persons acting for Malaysia should be legally trained in various jurisdictions to combat the multi-national strategies and tactics adopted by Cohen and Stampa.  They are all in place, and doubtless discharging their professional duties professionally and competently on behalf of Malaysia.

Because this is pre-eminently a legal dispute, the attorney-general, as the chief legal adviser for the nation, should be left to defend Malaysia’s interests.  It is currently in safe hands.  There is no need for a special task force or any other committee to be set up. 

Further, the dispute has reached an advanced stage in July 2022, as I write this.  A committee is a bureaucratic excuse for indecision.  Please let the attorney-general decide whether he needs to consult anybody; do not impose unqualified persons, ostensibly to help, but in reality to cloud decision-making.

Conclusion

In determining that the clause “Her Britannic Majesty’s Consul-General for Borneo” was capable in law to confer upon a court in Spain the power to appoint a sole Spanish arbitrator to determine the dispute in Spain and in ordering compensation of US$14.9 billion when the true loss for breach of contract is RM60,000, Stampa perversely re-wrote the terms of the 1878 Grant. 

No legal system, domestic or international, permits such a radical transformation by a third party of the bargain originally reached by the parties.  Stampa’s award is “per-incuriam”: hence, it is void and unenforceable. 

Stampa’s relocation of the seat of arbitration to France because the courts of Spain had ordered him to cease the arbitration makes it a fraudulent and dishonest award.  

Stampa and Cohen are enemies of Malaysia in the war of litigation they have unleashed against Malaysia.  We must stand united to repel such attacks.