Two Petronas assets worth US$2b said to be seized by Sulu sultan heirs

SHAH ALAM - The Petronas subsidiaries in Azerbaijan were seized by the heirs of the Sultan of Sulu and have claimed US $ 14.92 billion (RM62.59 billion) from Malaysia.

This comes after a French arbitration court ruled in March that Malaysia has to pay the descendants of the Sultan of Sulu at least RM62.59 billion as part of compensation over land in Sabah that was allegedly leased by their ancestors to a British trading company in 1878.

According to the Financial Times, the lawyers representing the heirs seized the assets of Petronas registered in Luxembourg, Petronas Azerbaijan (Shah Deniza and Petronas South Caucasus totaling a reported value of more than US$2 billion.

In March, a judge in France ruled that Malaysia, which inherited the obligations of these lease agreements upon securing from Britain must pay the descendants $14.9 billion.

Experts have called this case one of the most bizarre arbitration proceedings in history.

London-based lawyer Elisabeth Mason, who represents the plaintiff said Malaysia is required to abide by the terms of a signed contract upon which her client's claims is founded.

“Unlike so many dispossessed, our clients have an ongoing contract since 1878 and, as such, have a path to justice where many others did not," she said.

The seizure takes place as Malaysia, which has had four prime ministers since 2015 when it was shaken by disclosures of fraud from its 1MDB state fund, faces a critical time.

It is believed Petronas has reportedly been placed at the centre of government initiatives to control the nation's rise in debt.

Malaysia's Finance Minister Tengku Zafrul Aziz told the Financial Times that the boom could help the nation restore its balance sheet after the war in Ukraine raised oil prices.

But the amount owed to the Sulu heirs is expected to rise as long as Kuala Lumpur continues to disobey the ruling with the arbitrator in France concluding that Malaysia's outstanding liability to the heirs will rise by 10 percent.

Meanwhile Mason's co-counsel, Paul Cohen stressed Malaysia to either the international obligation (agreement) or it goes 'full Russia'.

"International law doesn’t let you pick and choose. Either Malaysia honours its international obligations or it goes ‘full Russia.

“We hope Malaysia will see the cost of being a legal pariah state and come to terms," he said.