No harm in pursuing mediation while trying to set aside arbitration award, says QC

KOTA KINABALU: The federal government should consider holding non-binding conciliation or mediation dialogues with the claimants of the French arbitral award dated Feb 28, 2022, says the Sabah Law Society (SLS).

It made the call following academic debate and insight on the matter from Queen's Counsel and international arbitrator Colin Ong during the "Philippines/Sulu Claim to Sabah" webinar on Monday (April 4).

SLS president Roger Chin said conciliation and mediation were non-binding and relied on a mediator mutually agreed upon by both parties to try and reach a consensus.

He said unlike arbitration, mediation was not designed to determine an “award”.

“Parties can formulate their own goals and try to edge closer together since they are not bound by the outcome of the proceedings,” he said in a statement Tuesday (April 5).

Chin added that since it was a voluntary process, participants exerted significant control over the outcome of their dispute and were generally motivated to amicably settle the issues.

On Feb 28, a French arbitration court instructed Putrajaya to pay at least US$14.92bil (RM62.59bil) to the descendants of the Sulu Sultanate.

The Spanish arbitrator had ruled that Malaysia had violated an 1878 agreement between the old Sulu kingdom in the Philippines and a representative of the British North Borneo Company that used to rule over the territory (which is now Sabah) after it stopped the annual cession payment of RM5,300 following the Lahad Datu intrusion.

In the webinar, Ong suggested that there was no harm in pursuing arbitration or litigation while at the same time also pursuing separate discussions facilitated by a neutral party to try and settle their disputes.

He said that even if Malaysia managed to set aside the French award, it did not provide a permanent legal solution to the dispute between the parties over how to deal with the payment disputes over the 1878 agreement.

He added that if the parties failed to reach a mutual solution, then the talks could be abandoned, and they could go back to arbitration or litigation.

"One such possible mutually acceptable decision could be a 'few cents in the dollar' approach where any award given could be mutually settled at a greatly reduced amount than what was awarded," he said.

He added that such a non-binding conciliation approach should be held in tandem with any legal actions by the Malaysian government to resist or set-aside the French arbitral award.

He explained that in doing so, it would not be prejudicial in any way at all to the Malaysian government’s efforts to protect its interests.