The French Court of Cassation, the pinnacle of the French judiciary, has just issued a groundbreaking ruling, kickstarting a much-needed crackdown on corruption – writes Saman Rizwan
Its decision marks the end of a traumatic legal battle, dragged out for over a decade.
Some would even argue that this case stretches back to 1878, when British colonisers forged a dubious agreement with the Filipino Sultan of Sulu, promising annual payments in return for control over the oil-rich region of Sabah.
In 1962, the people of Sabah overwhelmingly voted to join the newly formed State of Malaysia, which agreed to continue the Sulu’s payments.
But the deal fell apart in 2013, after the Sulu’s launched a deadly invasion of the Sabah region and the Malaysian Government decided to end its inherited payments.
For a few years, peace was restored. Then, the self-proclaimed heirs to the Sulu Sultan fell in with a controversial law firm based in the UK, which then teamed up with Therium – a British litigation investor that raises funds from unnamed parties and finances court cases in exchange for a share of the reward.
Together, they advised the Sulu heirs to file a claim against Malaysia, demanding compensation for Sabah’s resources despite the fact that the 1878 agreement did not contain an arbitration clause.
The case was initially to be heard in Spain, with Dr Gonzalo Stampa appointed as sole arbitrator. Two years later, however, the Courts of Madrid revoked Stampa’s powers and ordered him to drop the proceedings altogether.
By then, the Sulu’s lawyers and third-party investors had caught the scent of what promised to be an almighty payout. Following payment of an unusually high fee of over $2 million Stampa ignored the orders of the Spanish Court and transferred the case to a Court in Paris, where he gave a final ruling in the claimants’ favour and ordered Malaysia to pay a staggering award of almost $15 billion.
Since then, the case has accelerated dramatically. Malaysia appealed Stampa’s ruling in both France and Spain, and was granted a stay on the award, while Stampa himself was criminally convicted for contempt of the Court in Spain.
Meanwhile, the Sulu’s lawyers and third-party investors grew increasingly desperate to cover their losses. Their scattergun approach to regaining favour has included several of their own appeals, culminating in their unlawful seizure of assets belonging to Malaysia’s national energy firm – which returned the favour by subpoenaing Therium for evidence of Stampa’s payout.
Their most recent attack has been to launch a whopping $18 billion claim against Spain, via the International Centre for Settlement of Investment Dispute (ICSID), arguing that the conviction of Stampa derailed their case.. As commented by Keith Ellison, Attorney General of Minnesota and one of the most recognised lawyers in the US, “the sheer scale of potential corruption is clear.”
Despite their nefarious plan, the case has completely unravelled – with Therium out of pocket by at least $20 million. In September this year, the Dutch Supreme Court dismissed their last-ditch appeal holding their to be no arbitration clause in the 1878 Agreement. Now, the French Supreme Court has doubled down and determined, of its own volition, that the 1878 Agreement does not contain an arbitration clause,, paving the way for Malaysia to seek a conclusive annulment of his award.
This display of cerebral consensus and solidarity between Europe’s courts signals the start of a united crackdown on corruption – and it comes at just the right time. With allegations of corrupt practices at the highest levels of the EU, we need to trust that our legal institutions are committed to upholding the highest standards of justice.
Sadly, this is not something we can take for granted. Just last year, France’s own Justice Minister Eric Dupond-Moretti was on trial for allowing illegal conflicts of interest to influence his work in the role. Although he was later cleared of all charges, the incident undoubtedly shook citizens’ confidence in the judicial system.
By ruling in Malaysia’s favour, the French Supreme Court has reminded us of its strength and resilience, alongside a final ingredient vital to restoring public trust: the humility to admit that Stampa’s ruling should never have been allowed in the first place.