COMMENT | The claimants in the arbitration are successors-in-interest to the last Sultan of Sulu.

The sultan signed an agreement in 1878 with a group of British and German entrepreneurs for the exploitation of minerals and forest products in territory under his control, in return for annual payments.

The entrepreneurs’ rights passed to Sabah state upon its independence in 1963. Malaysia continued to make annual payments of approximately US$1,000 but stopped making payments in 2013.

The claimants pointed out that Malaysia's former attorney general Tommy Thomas admitted in his autobiography that there were no legal grounds for Malaysia to refuse to continue making the payments and that Sabah state was in breach of the agreement. 

The tribunal, consisting of sole arbitrator Gonzalo Stampa, held that the 1878 agreement was an international private lease agreement of a commercial nature.

He found that the...