KUALA LUMPUR – The move by Luxembourg authorities to seize two Petronas subsidiaries reportedly worth US$2 billion (RM8.87 billion) has raised serious questions over the security of other national assets abroad.
While Petronas has clarified that the subsidiaries have already divested their assets in Azerbaijan, stakeholders are expressing grave concern that this latest turn of events could potentially be a precursor of things to come.
Chiefly, their main fear is the Luxembourg case could presage a possible wave of similar actions on Malaysian assets in other foreign countries.
Majlis Amanah Rakyat has already alerted all its entities in foreign countries following the Luxembourg action, highlighting the gravity of the issue.
This comes in the wake of Spanish arbitrator Gonzalo Stampa issuing an award of US$14.9 billion in an arbitration court in Paris to the heirs of the Sulu sultanate, in relation to their claims over Sabah in February.
In this regard, the government has been urged to act swiftly and take a hard stand on the matter.
Speaking to The Vibes, Singapore Institute of International Affairs senior fellow Oh Ei Sun said the development involving the Petronas subsidiaries proves Malaysia is not au courant (fully informed) of arbitrary proceedings involving a state and a private entity, the latter being the Sulu heirs.
This led the country to be caught off-guard when the seizure orders were served on the national oil and gas company.
“I think as we proceed with this case and in countering future cases, we need to look at arbitrations more seriously beyond just claiming sovereign immunity, which would work if it was just involving two sovereign states.
When it comes to arbitrations (between a private entity and a state), it’s a bit murky. I think it’s high time Malaysia pays more attention to this trend, or it could potentially see more sovereign assets in foreign countries seized.”
Claims not taken seriously
In a report by Financial Times, it was claimed that Petronas Azerbaijan (Shah Deniz) and Petronas South Caucasus, which manage the company’s interest in Azerbaijan, were seized by Luxembourg authorities.
This is linked to the US$14.9 billion award issued to the Sulu sultanate, supposedly due to Malaysia’s violation of an 1878 agreement after the country ceased paying the Sulu heirs their RM5,300 cession money in 2013 following the Lahad Datu armed incursion.
However, Law Minister Datuk Seri Wan Junaidi Tuanku Jaafar clarified yesterday that Malaysia has received a stay on the final award after the French appeal court found its enforcement could infringe on the country’s sovereignty.
Sg Buloh MP Sivarasa Rasiah, who is a lawyer, said the controversy could have stemmed from two possible reasons – those responsible having overlooked the matter, or that they treated the possible implication of the court order to award the Sulu heirs too lightly.
“In any case, this is a very serious negligence on the part of the government. The prime minister and attorney-general have to look at this issue immediately,” he said when contacted.
He also took aim at the previous Barisan Nasional government for stopping the RM5,300 payment in 2013, which triggered the arbitration proceedings, describing the move as irresponsible.
What they did was open the door to the Sulu descendants to take legal action against us, which was exactly what they did.”
According to Sivarasa, former attorney-general Tan Sri Tommy Thomas had taken initial measures to counter the arbitration action during his time in office, but this fell by the wayside following the collapse of the then Pakatan Harapan administration.
In view of this, he urged the government to disclose full details of the action currently taken by the authorities to counter the claims made by the Sulu heirs and to act immediately to prevent any seizures.
Notify foreign countries of possible future claims
Former Malaysian Bar president Salim Bashir Bhaskaran said as an immediate measure, Malaysia should send diplomatic notes to foreign countries on possible legal claims made by Sulu heirs in the future.
This, he said, is critical in Malaysia’s bid to be notified should a similar application be made against national assets.
Salim also noted that the country was never interested in participating in the arbitration proceedings, while the subject matter of claim is not commercial in nature and should as such not be subject to arbitration.
Fellow ex-Bar president Ragunath Kesavan similarly questioned the decision to seize Malaysia’s foreign assets when the case involving the Sulu descendants is still ongoing.
“However, the concern for us is that we need to move immediately to set aside the order to award them so they don’t move to take over other assets.”
Meanwhile, former deputy foreign minister Datuk Marzuki Yahya urged the government to act swiftly, saying the recent events that transpired in Luxembourg are not a good sign for Malaysia.
“I demand an immediate solution to this issue so matters are not aggravated from the current messy state.” – The Vibes, July 14, 2022
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