Sabah

A grant from two sultans

Sabah forms the northern part of Borneo, below the typhoon belt, which is why it was called the “Land Below the Wind”. For centuries its contacts were mainly with the Philippines. In 1877 a private syndicate obtained land grants from the sultans of Brunei and Sulu; in 1881 it was chartered as the British North Borneo Company. The territory got its boundaries in 1898, became a British crown colony in 1946 and joined Malaysia in 1963.^[1]

The Sultan of Sulu’s grant to Overbeck and Dent is dated 22 January 1878.^[2] The company paid the sultanate 5,000 Malayan dollars a year for it, raised to 5,300 in 1903, and Malaysia went on paying the same sum after 1963.^[4]

Lease or cession?

The quarrel turns on the word “pajak” in the 1878 deed, which was written in Arabic. The Philippines says it means lease; Malaysia says cession.^[3] On the Philippine reading, the sultanate kept its title to the land from 1878 to 1962, while the company only ran it. In 1962, the Philippines says, the sultan’s heirs ceded that title to the Philippine state.^[2]

Manila also argues that the British North Borneo Company never had sovereign rights, and that Britain did not acquire sovereignty from Spain in an 1885 protocol or from the company in an 1888 protectorate agreement.^[5] Malaysia reads the annual payments as made on the basis that the sultanate had ceded the land.^[4] In the early 1960s, as Malaysia was being formed, the Philippines revived its claim without success.^[1] The Manila Accord of 31 July 1963 between Indonesia, Malaya and the Philippines took “cognizance” of the claim.^[2]

At the World Court

In 2001 the Philippines asked to join a case at the International Court of Justice between Indonesia and Malaysia over two small islands off Sabah, Ligitan and Sipadan, to protect its claim to North Borneo. Malaysia called the Philippine claim “a fiction which is quite unsustainable”. On 23 October 2001 the Court refused the request by 14 votes to 1, finding that the Philippines had not shown how the case could affect its legal interests. It did not rule on the claim itself.^[2]

Lahad Datu and the $15 billion award

In 2013 about 200 followers of Jamalul Kiram III, who called himself Sultan of Sulu, sailed from the southern Philippines to Lahad Datu in eastern Sabah to press the claim and occupied a village there.^[6][4] Shooting began on 1 March and the fighting went on for weeks.^[6][4] By October, 68 people had been reported dead, including nine members of Malaysia’s security forces and six civilians.^[4] Malaysia then stopped the annual payments. The heirs, who said they had no part in the incursion, went to arbitration.^[7]

In 2022 a Spanish arbitrator, Gonzalo Stampa, awarded the heirs $14.9 billion against Malaysia.^[7][8] French courts refused to enforce his partial award, a decision France’s highest court confirmed on 6 November 2024; the arbitrator had been convicted of contempt of court earlier that year.^[7][8] In December 2025 the Paris Court of Appeal annulled his final award, finding he had no jurisdiction because there was no valid arbitration agreement binding Malaysia.^[8]

A claim not withdrawn

On a visit to Kuala Lumpur in July 2023, President Ferdinand Marcos Jr said the Philippines had “an outstanding claim that we are not withdrawing”, but that it could not be decided now and both sides would talk about solvable issues first.^[3] In early 2026 a Philippine foreign affairs spokesman said the country maintained its claim; Sabah politicians replied that the state’s place in Malaysia was settled.^[5]

“It can’t be avoided, because we do have an outstanding claim that we are not withdrawing…but it’s clear to all parties involved that the issue can’t be decided on now”^[3]