The Sultan of Sulu Case (continued)

On 9 January 2024, the Paris Court of Appeal handed down a new decision in the Sultan of Sulu case, which we commented on previously here.

As a reminder, this saga has its origins in a nearly 150-year old agreement , concluded in 1878 between the Sultan of Sulu and two European explorers, which provided for annual payments to the Sultan and his heirs.  After Malaysia stopped making the payments in 2013, the heirs initiated ad hoc arbitration proceedings.

The sole arbitrator, appointed by the Spanish courts, assumed jurisdiction in a partial award issued on 25 May 2020 and subsequently ordered Malaysia to pay the heirs USD 14.92 billion in a final award issued on 28 February 2022.

The order granting exequatur to the partial award was overturned by the Paris Court of Appeal in a ruling dated 6 June 2023. The Sultan’s heirs have appealed against this judgement.

At the same time, Malaysia lodged an action for annulment of the final award with the Paris Court of Appeal.  The Sultan’s heirs then applied for a stay of proceedings on the grounds that the forthcoming ruling from the Court of Cassation on the enforceability of the partial award would have a direct impact on the action to set aside the final award.

The Paris Court of Appeal agreed with the heirs, pointing out that the appeal to the Court of Cassation concerning the partial award directly affected the action to set aside the final award, since the ground of lack of jurisdiction of the arbitral tribunal on which the refusal to enforce the partial award was based was also raised before the Court of Cassation.

The Court of Appeal emphasised that possible foreign enforcement proceedings had no bearing on its assessment of the proper administration of justice. It added that such a stay would make it possible to avoid a second appeal and save costs for all the parties.  In the Court’s view, refusing to grant a stay could prove “counter-productive” and unnecessarily prolong the time taken to process the appeal against the final award, whereas the risk of conflicting decisions on the merits, in the event of a referral back to the Court of Cassation, was deemed not serious.

Therefore, in the interests of efficiency and the proper administration of justice, the Paris Court of Appeal stayed the annulment proceedings against the final award, pending the decision of the Court of Cassation.

The future of the final award against Malaysia of 28 February 2022 remains thus uncertain.

Citation: Cour d’appel de Paris, 9 janvier 2024, n° 22/04007.




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