Seems like we have another case of arbitration panelists behaving badly.
A Madrid Court of Instruction has opened an investigation into a Justice Administration lawyer from the Madrid High Court (TSJM) in the arbitration case between the government of Malaysia and the heirs of the Sulu Sultan.
The investigation was prompted by a complaint filed by Aránguez Abogados on behalf of Paul Cohen, the Sulu heirs’ lawyer, who is financially supported by the Therium fund. The complaint accuses the Justice Administration lawyer of crimes such as judicial prevarication, document forgery, procedural fraud, and coercion. The lawyer acted in the annulment procedure requested by Malaysia after the arbitrator, Gonzalo Stampa, was convicted of disobedience for not stepping down from the case after a sentence revoking his appointment.
Paul Cohen argues that the investigation is not just about legal back-and-forth but encompasses Malaysia’s entire strategy of disavowing the arbitration and intimidating – and finally harassing – the arbitrator. He hopes that the investigation will reveal how Malaysia manipulated the Spanish judiciary to achieve its goals and who helped them.
According to the complaint, the lawyer “abused his functions by sending an email on July 7, 2021, from his official office to Gonzalo Stampa Casas, who had been appointed as arbitrator in the conflict between Malaysia and the heirs.” The email stated that “since the annulment of the appointment procedure of arbitrators 4/2018 was declared through an order of June 29, 2021, which is final, and its appointment was therefore rendered null and void, it is necessary that you terminate your arbitration activity from the date of that resolution.”
The complaint alleges that the lawyer’s communication involves “numerous irregularities,” including the fact that he addressed Stampa, who was not a party to the procedure. It is not clear how the accused lawyer, who was not involved in the procedure, knew Stampa’s email address, and sending the email in that manner poses a serious privacy and data protection problem.
For Carlos Aránguez, the lawyer’s irregular actions constitute an unacceptable intrusion into the arbitration procedure and are criminal.
After the TSJM’s Civil and Criminal Chamber’s decision in 2021, which upheld the annulment of Malaysia’s summons and subsequent procedural acts, including Stampa’s appointment, Carlos Aránguez claims that “the accused lawyer did not limit himself to transcribing the operative part, but gave a direct order and exceeded his powers by saying that all activity must cease.”
The case involves a dispute between the Sulu heirs and Malaysia over an 1878 contract signed by the Sultan of Sulu or Jolo, the Baron of Overbeck, and another partner for the lease and exploitation of a vast expanse of land on Borneo Island. The Sultan’s heirs and the Malaysian government later subrogated to the contract. Malaysia benefited from the discovery of gas and oil in those lands.
In 2013, the lease payments stopped, and the heirs began legal action to enforce their rights, including an arbitration procedure that took place in Spain because the territories were under Spanish rule when the contract was signed.
Gonzalo Stampa, who was appointed as arbitrator by lottery following a sentence referencing him in March 2019, changed the arbitration’s venue from Madrid to Paris after the sentence annulling his appointment. At the end of February 2022, he issued the award, concluding that Malaysia had breached the 1878 contract and sentencing it to pay $14.92 billion.
The arbitrator also declared the 1878 contract as a “private international lease contract of a commercial nature” and terminated it, effective January 1, 2013. He concluded that the claimants have the right to recover the value of the leased exploitation rights under the 1878 contract and the 1903 Confirmation Deed, with a pre-award interest rate of 3.96% per year from January 1, 2013, until 2044.
