THE Kota Kinabalu High Court ruled today that the Federal Government acted unlawfully and beyond its constitutional powers by failing to uphold Sabah’s right to 40% of federal revenue collected from the state for nearly five decades.
Delivering the landmark judgement on Friday, High Court judge Datuk Celestina Stuel Galid declared that the special grants offered to Sabah in lieu of its constitutional entitlement were “invalid, ultra vires and irrational,” and in breach of the Federal Constitution.
“It is unlawful for the Federal Government to make special grants as contemplated under the Tenth Schedule,” she said in court.
The court further ruled that the Second and Third Review Orders—executive instruments issued jointly by the Federal and Sabah governments—were unconstitutional.
The decision granted the Sabah Law Society (SLS) full relief in its judicial review challenge against the federal government’s failure to enforce Article 112C and 112D of the Constitution.
In a significant move, the court also issued a mandamus order compelling the Federal Government to conduct a proper review of Sabah’s revenue rights under Article 112D, in cooperation with the Sabah state government, to restore the 40% entitlement for each financial year from 1974 to 2021.
The order mandates that the revenue review must be initiated within 90 days of the ruling, and a mutual agreement between both governments is to be reached within 180 days.
Additionally, a certiorari order was granted to nullify certain provisions in three government gazettes found to be inconsistent with Sabah’s constitutional rights.
The judicial review was initiated by SLS in June 2022, following decades of federal inaction. The society sought to challenge what it deemed a persistent failure by the Federal Government to enforce Sabah’s constitutional entitlement to a share of federal revenue derived from the state
Friday’s decision marks a turning point in federal-state relations and is seen as a major victory for Sabah in asserting its constitutional autonomy within the Malaysian federation. - October 17, 2025
