The matter centres on the Malaysian state of Sabah and a colonial agreement dating back to 1878.
In 1878, an agreement was entered into by the then Sultan of Sulu, Sultan Muhammad Jamal Al Alam with Messrs Gustavus Baron von Overbeck and Alfred Dent. By virtue of this agreement, the then Sultan of Sulu granted and ceded his land and territory, as well as sovereign rights, in North Borneo in exchange for a financial consideration of RM5,000 (local currency at the time). In 1903, Sultan Jamalul Kiram II confirmed the cession of islands to the British North Borneo Company and the annual cession payment increased to RM5,300.
In 1936, Sultan Jamalul Kiram II died and the payment was ceased as the rightful and legal heir to the Sultan could not be determined. In 1939, the High Court of the State of North Borneo (Chief Justice Macaskie) declared that the heirs of the Sultan of Sulu were entitled to receive payment under the 1878 Agreement (“Macaskie Judgment 1939”).
In 1962, the people of Sabah exercised their right to self-determination and joined the Federation of Malaysia when it was formed in 1963. The Government of Malaysia has never recognized the legitimacy of the so-called Sultanate of Sulu, however, it inherited the original position of Messrs Overbeck and Dent in the 1878 Agreement. As a consequence, Malaysia continued making payments to the heirs of the Sultan of Sulu from 1963 until 2012.
The payments were terminated in 2013 after a violent armed invasion of Sabah, launched from the Sulu Archipelago, under the orders of the self-proclaimed Sultan Jamalul Kiram III, which resulted in 78 casualties. The Government took decisive and logical action in response to a threat to its security and attacks on its soil.
In 2017, the purported heirs requested the UK Foreign Office to appoint a person to determine the dispute. However, the UK Foreign Office outright refused to appoint any person or to involve the British Government in the matter.
In 2018, the purported heirs of the Sultan Jamalul Kiram II decided to commence legal action in Spain with an application before the High Court of Justice of Madrid on the basis of a (non-existent) historical connection between Spain and the 1878 Agreement, requested the court to appoint an arbitrator. They alleged, essentially, that:
- Malaysia had breached the 1878 agreement because it had stopped the annual payments.
- Malaysia had to pay the Sulu Claimants damages reflective of the value of the supposed territories and had to renegotiate the 1878 Agreement for future revenues from the territory.
- The 1878 Agreement contained an arbitration clause (this is firmly denied by Malaysia) and therefore the Spanish Courts had to appoint an arbitrator to solve the dispute.
Matters have been ongoing since then.