The matter centers on the Malaysian state of Sabah and a colonial agreement dating back to 1878. Historically, the Sulu Sultanate was present in the Philippines and a small area of territory in Sabah.
During the 19th Century, southeast Asia was subject to colonial powers vying for territorial control across the region. In 1878, an agreement was signed by the Sultan and two merchants, Baron de Overbeck, and Alfred Dent. It saw the Sultan grant and cede his land and territory in North Borneo. In 1903, after Spain renounced all claims to the territory, the Sultan confirmed the cession to the British North Borneo Company and the annual cession payment increased to 5,300 local dollars, which is around US$1,200 today.
In 1936, the Sultan of Sulu, 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) identified 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 1878 colonial agreement. Payments were made for many years by Malaysia under the agreement to supposed heirs as determined by the Macaskie Judgement. 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 saw 73 people killed. The Government took decisively and logically action in response to a threat to its security, eliminating any possible connection between Government money and attacks on its soil.
Several years later, after failing in a request to ask the UK Foreign Office to preside over the case, the supposed heirs of the Sultan of Sulu began legal action in Spain with a Notice of Arbitration. It declared, among other things, that:
- Malaysia had breached the 1878 agreement
- Malaysia must pay the Sulu claimants damages reflective of the value of the supposed territories and renegotiate the 1878 agreement for future revenues from the territory.
Matters have been ongoing since then.