Sultan heirs seek to seize Malaysian assets in Netherlands

KUALA LUMPUR: Heirs of a late Southeast Asian sultan asked a Dutch court for permission to seize Malaysian assets in the Netherlands, their lawyer said, seeking enforcement of a US $15 billion arbitration award granted to them against Malaysia's government.

The petition in the Hague Court of Appeal is an escalation of a long-running dispute over a colonial-era land deal that threatens the global assets of the Malaysian government and state-owned companies.

Malaysia's government, which has said it does not recognise the heirs' claim, did not respond immediately to a request for comment on the Dutch petition.

A French arbitration court ordered Malaysia to pay $15 billion in February -- the second largest arbitration award on record -- to the descendants of the last Sultan of Sulu.

Malaysia won a stay on the ruling pending an appeal, but the award remains enforceable outside France under a United Nations treaty on international arbitration.

The heirs of the sultan, who once controlled a territory spanning rainforest-covered islands in the southern Philippines and parts of Borneo Island, asked the Dutch court to recognize and enforce the arbitration award.

The heirs want to take recourse against the assets of Malaysia, which are located in the Netherlands, according to a copy of the court petition shared by their lawyer.

Reuters was unable to verify the filing with Dutch court authorities.

The filing in the Netherlands will soon be followed by other enforcement actions of varying types, in multiple jurisdictions, according to lawyer Paul Cohen, a lead co-counsel for the sultan's heirs from British law firm 4 -- 5 Gray's Inn Square.

In an emailed statement, Cohen said that this could include immediate, direct attachment of specific Malaysian assets in The Netherlands and elsewhere.

The petition did not specify which assets were.

Some of Malaysia's biggest companies have operations in the Netherlands, including state oil firm Petronas and palm oil producer Sime Darby Plantations.

When contacted by Reuters, the companies had no immediate comment on the Dutch petition.

In July, two Luxembourg-based subsidiaries of Petronas were seized by court bailiffs as part of the heirs' attempt to claim the award.

Petronas, which described the Luxembourg seizure as baseless, said they would take legal measures to stave off future seizure attempts in 44 countries where it had assets and limit the company's funds abroad.

A deal between two European colonists and the sultan was signed in 1878 for the use of his territory in present-day Malaysia - an agreement that independent Malaysia honoured until 2013 and paid the monarch's descendants about US $1,000 a year.

After a bloody incursion by supporters of the former sultanate who wanted to regain land from Malaysia, Kuala Lumpur stopped the payments.

The heirs went to an arbitration court over the suspension of payments. Malaysia did not participate in, nor recognise, the arbitration.