Clearing the air on SLS 40% revenue appeal

THE legal battle for Sabah's entitlement to 40% of grant revenue, to quote former Sabah Law Society (SLS) president Datuk Roger Chin, has sparked significant controversy and emotional reactions.

"The legal challenge, spearheaded by the Sabah Law Society (SLS), has highlighted longstanding grievances among Sabahans about their financial rights under the Malaysia Agreement 1963 (MA63)," Chin said in a message to me.

"However, the involvement of the State-appointed counsel and his unexpected arguments have added layers of complexity to the case, leading to widespread confusion and dissatisfaction among the public."

Chin wrote to me in response to my recent article on the matter, which he called lopsided.

I appreciate his professionalism in dealing with me, unlike some emotional Sabahans who resort to name-calling.

Ironically, the 40% issue, which Sabahans demand, has divided some of us.

Some background first - on Thursday (May 16), the Court of Appeal heard the Federal Government's appeal against a High Court decision granting leave to SLS to seek a judicial review on the State's right to 40% of grant revenue.

The Federal Attorney General is challenging the Kota Kinabalu High Court's decision to grant SLS the right (locus standi) to do so against both the Federal and Sabah governments in the lawsuit.

It seeks to declare that the new 2022 Order agreed to by the Sabah Government is unconstitutional and to compel both - the Federal and State Governments - to hold another review to include the 40% Special Grant paid to Sabah. The 40% Special Grant refers to 40% of federal revenue earned from Sabah.

On that day, the Sabah government surprised everyone by intervening in the Federal Attorney General's appeal. The state government, represented by Tengku Datuk Fuad Ahmad, argued that the Sabah Government's rights under the Federal Constitution would be negatively affected if it was excluded from the hearing.

To ensure that this article is not "lopsided," I asked a lawyer, who is partial to the Sabah government, to give his take on the matter.

Let's go through the legal "he said, she said" on the issue.

One of Chin's critical points about my article is the omission of context for Fuad's "busybody" remark. In a press conference after the hearing, Fuad referred to SLS as a busybody.

"This term was used disparagingly, implying that SLS was unnecessarily involving itself in the matter. This remark has been perceived as unprofessional and dismissive of SLS's legitimate legal efforts to advocate for Sabah's financial rights," Chin wrote.

The lawyer, partial to the Sabah government, explained that "busybody" in a judicial review is a legal term that refers to a party that does not have standing (a right or interest in the matter – locus standi).

"State Counsel did not use the term 'disparagingly' but in the usual context that the term is used to describe persons, such as the SLS, without standing in the court," he said.

Another point that Chin raised was the inappropriate arguments by the state-appointed counsel.

The former SLS president noted that state-appointed counsel made several arguments that are traditionally the responsibility of the Federal Attorney General's Chambers (FAGC).

"His submission that the 40% special grant is merely aspirational and not an absolute right directly contradicts the official stance of the Sabah government," he said.

"Ordinarily, the state counsel should advocate in favour of the State's position, not undermine it by aligning more closely with federal viewpoints.

"This misalignment raises questions about the motives and coordination within the State's legal strategy."

The lawyer, who did not want to be identified, countered that the SLS claim against the Federal and State Government of Sabah alleges as follows:

"That the 2022 Order where an interim payment with effect from 1 January 2022 for the financial years 2022, 2023, 2024, 2025 and 2026, grants in the amount of RM125.6mil, RM129.7mil, RM133.8mil, RM138.1mil and RM142.6mil, respectively, is unconstitutional;

That the conduct of the Federal and State Governments in agreeing to the 2022 Order is unconstitutional;

That the court must order a new review to give effect to the 'lost years'."

"The State has a right to defend itself from allegations of unconstitutional conduct. The State also has a duty to defend its rights and interests against the Federal Government," he said.

Chin pointed out that the state-appointed counsel's submission that the 40% entitlement is aspirational rather than a legal right is particularly damaging.

"In ordinary meaning, 'aspirational' means a strong desire for something only,' he said.

The former SLS president said this interpretation conflicts with the state government's official position, as reiterated by both Sabah Chief Minister Datuk Seri Hajiji Noor and state Attorney General Datuk Nor Asiah Mohd Yusof.

"They have asserted that the 40% grant is a constitutional right, and the state is entitled to compensation for the 'lost years' from 1974 onwards. The use of 'aspirational' in this context undermines the state's case by suggesting that the entitlement is not guaranteed by law," he said.

The lawyer countered that the 40% was conditional, and the Sabah Government was committed to achieving it through its review with the Federal Government. "Something that you work hard at achieving is 'aspirational' This is the context in which that word was used. It does not mean 'to dream'. It means to work hard towards an important goal," he said.

He explained that the Federal Constitution stated that the 40% grant is only available if the following conditions are met:

(i) The Federal Government's financial position must allow for the disbursement;

(ii) The specific needs of the State must justify the grant;

(iii) There must be an assessment confirming the adequacy of funding for state services; and

(iv) An agreement must be reached with the Federal Government regarding the payment (Article 112D).

Chin said that Thursday's "filing” took SLS by surprise. "The state government's official filings initially sought to have SLS's leave for judicial review dismissed. However, at the last minute, this position was abandoned without informing SLS and thus taking SLS by surprise," he said.

"Instead, the State sought to intervene in the appeal without clarifying its stance on the substantive issues of locus standi and justiciability.

"This abrupt change in strategy without coordination with SLS has sown confusion and weakened the State's legal position."

He added: "It appeared disorganised and contradictory, failing to present a united front in pursuing Sabah's financial rights."

In defence of Fuad, the lawyer explained that “the Federal AG wanted the whole of the review mechanism under the Federal Constitution to be declared non-justiciable, meaning that Sabah can never bring the Federal Government to court on the 40% matter.

“That is one reason why the Sabah Government had to intervene. The second was to state that there is no need for a court to order another review since the Sabah and Federal governments are already conducting one where the 40% grant is being negotiated.

"In that sense, the SLS suit in a way is already academic,” he said.

Which legal, "he said, she said" would you accept?

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SLS , Sabah , Roger Chin


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