Luxembourg court bailiffs on Tuesday issued new seizure orders for two units of Malaysia’s energy giant Petronas following a bid by descendants of a former sultanate to enforce a $15 billion award they had won against Malaysia, according to the heirs’ lawyer and court documents seen by the Reuters.

The Filipino heirs of the last Sultan of Sulu are seeking to enforce a $14.9 billion award granted to them last year by a French arbitration court amid a long-running dispute with the Malaysian government over an 1870s land deal.

Malaysia, which did not participate in the arbitration, maintains the process is illegal. It obtained a stay on the award in France, but the ruling remains enforceable overseas under a United Nations treaty on arbitration.

Luxembourg court bailiffs issued a second seizure order on the units and related bank accounts, court documents shared by the heirs’ lead co-counsel Paul Cohen, showed.

Reuters reported Cohen as saying the Luxembourg district court had lifted the first seizure order on a minor issue that has since been addressed but had not made a judgement on the merits of the arbitration.

“There was a technical ruling that has now been effectively dealt with, and the freezing orders are once more in place on Petronas’ assets in Luxembourg,” Cohen was quoted by Reuters.

“Petronas confirms the new seizure orders against its two entities in Luxembourg and their parent company,” the Malaysian company said in a statement on Thursday.

“Petronas firmly maintains that the action taken by the Sulu claimants against the entities is baseless and will continue to defend its legal position.”

Original seizure

Last July, two Luxembourg-registered subsidiaries of Petronas were seized on behalf of descendents of the former Sultan of Sulu, after a French arbitrator ruled that they were entitled to $14.9 billion relating to an historic land lease agreement in the oil-rich state of Sabah, which today is part of Malaysia. However, the Malaysian government in January said that the order had been set aside by a Luxembourg district court.

The original seizure was part of legal efforts launched six years ago by the Sulu heirs to win compensation over land in Sabah they claim their ancestor leased to a British trading company in 1878, before the discovery of vast natural resources in the area.

Petronas at the time confirmed that the two subsidiaries had been served with ‘Saisie-arret’.

“[However], we wish to clarify that these subsidiaries, Petronas Azerbaijan (Shah Deniz) and Petronas South Caucasus, have previously divested its [sic] entire assets in the Republic of Azerbaijan and the proceeds from the exercise have been duly repatriated,” Petronas then said.

Download the Upstream News app
Read high quality news and insight on the oil and gas business on-the-go

Azerbaijan assets divested

Petronas in 2021 agreed to sell for $2.25 billion its 15.5% interest in the Shah Deniz field held by the subsidiaries to Russia’s Lukoil although Shah Deniz operator UK supermajor BP and partner Azerbaijan’s state-owned Socar exercised their pre-emption rights to acquire part of Petronas’ stake, leaving Lukoil to pick up 9.99%. The transaction is understood to have closed in the first quarter last year.

“Petronas views the actions taken against it as baseless and is working vigorously to defend its legal position on this matter,” the Malaysian energy giant earlier said.

The Sulu heirs’ lawyers said the two subsidiaries were now under the control of bailiffs in Luxembourg, pending any appeal by Petronas, reported Reuters.

The Malaysian government fought the legal action and the Paris Court of Appeal in July 2022 granted leave to the government’s application to suspend enforcement of the Final Award on claims by the parties claiming to be the heirs and successors-in-interest of the former Sulu sultan.

Malaysia’s then-Law Minister Wan Junaidi Tuanku Jaafar said that the leave meant the previous ruling was not enforceable in any country until an ultimatum is reached in Paris.

Malaysia a decade back stopped payment of cession money to the Sulu sultan heirs after an attack on Lahad Datu, Sabah — where Petronas had earlier considered building a liquefied natural gas terminal — by self-proclaimed Sulu ruler Jamalul Kiram III, the Malay Mail earlier reported.

Lawyers for the heirs of the Sulu sultanate claim that Malaysian assets in tens of countries are still at risk of being seized despite the stay ordered on Wednesday by the French court.

Cohen previously told Reuters that the stay applied only to France and not the other nations that are signatories to the 1958 New York Convention on international arbitration.

Never miss a must-read story
Get notified when we publish articles from your selected sectors, businesses or journalists.