BEHIND THE SCENES OF CONTROVERSIAL INTERNATIONAL COMMERCIAL ARBITRATION: CASE STUDY OF HEIRS TO THE SULTANATE OF SULU V. MALAYSIA

Abstract

An ad hoc arbitration final award of US$14.92 billion (approximately RM62.59 billion) in favour of the heirs of the 19th-century sultanate, the late Sultan of Sulu, Sultan Jamalul Kiram II against Malaysia handed down by a sole arbitrator had created much discussion in the international public and private law arena. Malaysia challenged the Award in the Paris Court of Appeal and successfully stayed the Award’s enforcement in France. During the same time, two Luxembourg-registered subsidiaries of the Malaysian state oil company Petronas were served with ‘saisie-arret’ by bailiffs, pending any appeal by Petronas against the seizure. This paper focuses on the international private law setting of international commercial arbitration and its significance to the case study. This paper concentrates on issues derived from international commercial arbitration regarding the case study of the Award, including the arbitration clause and seat, the issue of third-party funding and ethical international commercial arbitration. This paper employed the qualitative content analysis research method in analysing the issues related to international commercial arbitration using primary and secondary sources. The findings of the article conclude that there are divergences in the principles applied in the Award regarding arbitration clause and seat, that the case is motivated by third-party funding which calls for further ethical considerations and discussion in international commercial arbitration.