Sunday, May 26, 2024

Sultan of Sulu´s arbitration nullity fractures TSJM´s opinion

The case of the Heirs of the Sultan of Sulu v Malaysia, in which the heirs are represented by the law firm B. Cremades & Asociados and attorneys Paul H. Cohen and Elisabeth A. Mason of 4-5 Gray's Inn Square, will be borught before the Constitutional Court regarding the arbitrator´s apointment anullment after the last Madrid High Court of Justice decision


On 11 January 2022, the Claimants filed a pleading with the TSJCM (Madrid High Court of Justice) withdrawing the appointment of a new arbitrator on the grounds that they continue to believe that Dr. Gonzalo Stampa was well appointed and that the seat of arbitration had been moved to France. Therefore, there was no need for a new arbitrator. On 28 January 2022, Malaysia filed a pleading with the TSJCM not opposing the withdrawal of the new arbitrator.

While the decision of the TSJCM on the said withdrawal was still pending, on 15 March 2022, Malaysia filed a written submission with the TSJCM informing it of (1) the transfer of the seat to Paris; (2) the issuance of the Final Award in Paris; and (3) the existence of the court proceedings in France. Malaysia also requested the TSJCM to “DECLARE that the ‘Final Award’ of 28 February 2022 rendered by counsel Dr Gonzalo Stampa in the ad hoc arbitration brought by Nurhima Kiram Fornan and others against Malaysia is legally non-existent as an arbitral award, having been rendered by someone who lacks the status of arbitrator as his appointment has been annulled by this same Chamber that appointed him, and also make such other rulings as it deems appropriate.”

Without summoning the Claimants to comment on Malaysia’s request of 15 March 2022, the TSJCM issued its order of 12 April 2022 (5/2022), the operative part of which provides as follows: “The Attorney [..] on behalf of [the Heirs] is deemed DISMISSED from pursuing the present proceedings, in accordance with the provisions of Article 20.3 of the LEC, declaring the archive of the present proceedings, without express sentence in costs.” However, in Legal Ground 1, the TSJCM stated obiter dicta that the “declaration of radical nullity of the initial appointment of the arbitrator Mr Gonzalo Stampa Casas, consequently renders[ ] this appointment and the arbitration function for which he had initially been appointed without effect and virtuality, which implies the loss of validity of the actions that he had carried out in this function.”

The aforementioned passage prompted a strong dissenting opinion from Judge Jesus M. Santos Vijande (who also formulated a strong dissenting opinion against the order of 29 June 2021). Santos Vijande correctly understands that the sole arbitrator’s actions can only be annulled “within the corresponding action for annulment against the Partial Award and/or against the Final Award that the Arbitrator has rendered”. And he adds that “he can only express [his] opinion that in this case there is no room for this Chamber to argue -there is properly no pronouncement-, not even as obiter dicta, in a way that goes beyond the legal scope of the proceedings at hand, whether that argumentation is made ex officio or at the request of a party.”

According to B. Cremades Jr, the TSCM makes its statement obiter dictum, i.e. without any power to bind the parties or to have any legal effect. For such a statement to have had any legal effect, it should have been made in the operative part of the order (which it does not). He also states that the TSCM carefully omits to refer to the Arbitral Awards as expressly requested by Malaysia.

“The nullity of the arbitral proceedings, as Judge Santos Vijande correctly states in his dissenting opinion, can only be annulled by means of an appeal for annulment of the arbitral award under Article 41 of the Spanish Arbitration Act. The two awards rendered by Gonzalo Stampa are capable of being recognised and enforced against Malaysia in any of the 169 signatory countries of the 1952 New York Convention, even if they have been annulled in origin (quod non), in accordance with Article V.1.e of said Convention. The reiterated action of the TSJCM in relation to this arbitration ratifies the need for the Constitutional Court to admit the appeal filed by the Claimants against the order of 29 June 2021,” Cremades added.

Check the previous news informed by Legal Dealmaker on this case regarding the restitution amount and the story of the arbitration.

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