Malaysia has welcomed a significant ruling from the High Court of Justice in Madrid, describing it as a powerful endorsement of the government’s steadfast commitment to defending national sovereignty and sovereign immunity in the long-running Sulu claim dispute. The decision, dated 11 February 2025, dismissed an attempt by the Sulu claimants to overturn a 2021 ruling that had annulled the appointment of arbitrator Gonzalo Stampa, marking another chapter in a complex legal battle with deep historical and geopolitical roots.
The Madrid court’s latest verdict reinforces a final and binding decision from 29 June 2021, which found that Malaysia had been improperly summoned to the arbitrator appointment proceedings. As a result, Stampa’s appointment and all subsequent actions he took in that capacity were declared invalid. The court reiterated that Malaysia must be properly summoned and that the process for appointing a new arbitrator should restart from scratch. Furthermore, the Sulu claimants were ordered to bear the legal costs of this latest challenge, with the court dismissing their arguments as lacking sufficient evidence.
A Disputed Legacy and Modern Legal Battles
The Sulu claim traces its origins to a historical agreement from 1878, when the Sultanate of Sulu, based in what is now the southern Philippines, ceded control of certain territories in North Borneo—present-day Sabah, a state in East Malaysia—to the British North Borneo Company. In exchange, an annual payment was agreed upon, often referred to as “cession money.” Malaysia, which assumed control of Sabah upon independence in 1963, continued these payments until 2013, when it halted them following a violent incursion by armed followers of the self-proclaimed Sulu Sultan into Sabah, known as the Lahad Datu standoff. The incident resulted in dozens of deaths and heightened tensions over the disputed territory. 
The Sulu claimants, who assert they are descendants of the historical Sultanate, argue that the territory was merely leased, not ceded, and have sought compensation or recognition of their ownership through international arbitration. Malaysia, however, maintains that the territory is an integral part of its sovereign land and views the claims as baseless and a direct challenge to its national integrity.
In the legal arena, the dispute took a contentious turn with the appointment of Gonzalo Stampa as arbitrator. The Madrid court’s 2021 ruling annulled his appointment on procedural grounds, citing improper summons of Malaysia to the proceedings. Despite this, Stampa controversially relocated the arbitration process from Madrid to Paris at the request of the Sulu claimants, a move widely perceived as an attempt to evade Spanish judicial oversight. During this period, he reportedly received over USD 2.7 million from the claimants, who were financially supported by Therium, a London-based litigation funder. Stampa’s actions later led to two criminal convictions in Spain, though specifics of these convictions remain outside the scope of this report due to limited primary source confirmation at this time.
Allegations of Interference Dismissed
The Sulu claimants made a renewed attempt to annul the 2021 decision in December 2023, basing their challenge on a press article alleging that Spain’s foreign ministry had exerted political pressure on the Madrid court due to economic interests with Malaysia. If true, such interference could have cast doubt on the impartiality of the judicial process. However, the court categorically rejected these claims in its February 2025 ruling, stating that the allegations were grounded solely in media speculation rather than concrete evidence. The judges affirmed that no external pressure had been applied and that the 2021 decision was rooted strictly in legal principles.
In a press release issued by the War Room Sekretariat Khas Menangani Isu Tuntutan Pihak Yang Mendakwa Waris Kesultanan Sulu, a special task force established by the Malaysian government to address the Sulu claim, the ruling was hailed as further validation of Malaysia’s position. The statement underscored the government’s resolve to protect national sovereignty at all costs, framing the legal victory as a testament to the strength of Malaysia’s case on the international stage.
Broader Implications for Sovereignty and Arbitration
The Madrid court’s ruling carries implications beyond the immediate legal dispute, raising critical questions about the integrity of international arbitration processes and the balance of power between sovereign states and private claimants. Arbitration, often seen as a neutral mechanism for resolving cross-border disputes, relies heavily on procedural fairness and mutual consent. The court’s finding that Malaysia was improperly summoned underscores the importance of due process, particularly when a nation’s sovereignty is at stake.
For Malaysia, the decision is a significant boost in its ongoing efforts to quash the Sulu claim once and for all. The government has consistently argued that the issue is a matter of national security and territorial integrity, rather than a commercial dispute suitable for arbitration. This stance has been echoed by legal experts in the region, who note that allowing arbitration to proceed without proper procedural safeguards could set a dangerous precedent for other historical territorial claims in South East Asia, a region with a complex colonial past and numerous overlapping territorial disputes.
If the process to appoint a new arbitrator proceeds as mandated by the court, it remains to be seen whether the Sulu claimants will persist in their legal efforts or seek alternative avenues to press their case. Analysts suggest that the financial backing of litigation funders like Therium may enable prolonged legal challenges, though the repeated setbacks in Madrid could deter further investment in a case that appears increasingly untenable. It should be noted, however, that these observations remain speculative, as no direct statements from the claimants or their backers have been made available following the latest ruling.
Regional and International Context
The Sulu dispute also resonates within the broader geopolitical landscape of South East Asia, where historical grievances often intersect with modern political and economic interests. Sabah, rich in natural resources and strategically located near key maritime routes, is a vital component of Malaysia’s economy and national identity. Any perceived threat to its sovereignty inevitably draws intense scrutiny from both domestic and international observers.
Moreover, the involvement of foreign entities—whether arbitrators, litigation funders, or courts—adds a layer of complexity to the dispute. Malaysia has repeatedly expressed frustration over what it sees as external interference in a matter of internal sovereignty. The relocation of the arbitration to Paris, for instance, was met with sharp criticism from Kuala Lumpur, which viewed the move as an affront to both Spanish judicial authority and Malaysia’s legal rights.
For the Philippines, which has historical ties to the Sulu Sultanate and has at times supported the claimants diplomatically, the dispute presents a delicate balancing act. While Manila has not officially endorsed the Sulu claim in recent years, the issue remains a point of contention in bilateral relations with Malaysia. If the Madrid ruling leads to a renewed arbitration process, it may prompt further dialogue—or tension—between the two nations, though this remains a hypothetical outcome at this stage.
A Step Towards Resolution?
As the legal saga unfolds, the Madrid court’s ruling offers Malaysia a moment of respite and a reaffirmed stance on the international stage. Yet, the underlying issues of historical claims, territorial integrity, and the role of arbitration in sovereign disputes are far from resolved. The government’s War Room task force has signalled its intent to remain vigilant, preparing for any future challenges that may arise from the Sulu claimants or their supporters.
For now, the dismissal of the claimants’ latest appeal and the court’s clear stance against procedural irregularities stand as a victory for Malaysia. Whether this marks a decisive turning point in the decades-long dispute or merely a temporary reprieve remains to be seen. What is certain, however, is that the battle over Sabah’s sovereignty will continue to shape legal, political, and diplomatic narratives in the region for years to come.
