Sabah: The Achilles heel in Malaysia-Philippines Relation

Getty Images

Understanding the Geography

Sabah covers an area of 29,000 square miles in the northeast corner of the island of Borneo. Boundaries along generally remote mountainous terrain separate the state from its Malaysian sister-state of Sarawak to the southwest and Indonesian Kalimantan to the south.

The coastline of Sabah is highly indented with harbours offering excellent anchorage and profits, its economy is booming based on agriculture, forestry, and petroleum.

Although sovereignty was never questioned during the more than 80 years of British control, the Philippines has challenged Malaysian ownership of the territory since Sabah became a state within that federation in 1963. The state’s extensive stands of commercially exploitable timber probably are an economic attraction to the Philippines, as they could compensate for the dwindling Philippine timber resources. Perhaps of greater appeal are Sabah’s vast underpopulated tracts, which could provide resettlement sites for much of the excess population in the increasingly crowded northern and central Philippine islands.

Sabah on map


The roots of the disagreement lie in an 1878 contract between the Sulu Sultanate – which controlled Sabah at the time – and the British North Borneo Company. The British company could occupy the eastern half of Sabah indefinitely as long as it paid a sum of money to the Sultanate.

When World War 2 ended, Sabah was handed over to the British government and made a crown colony. Sabah gained independence in 1963 when in a referendum, its people overwhelmingly voted in favour of joining the Federation of Malaysia. The Philippines has always maintained that the contract signed in 1878 was to be interpreted as a lease whereas the British and Malaysia regarded it as the sale of land. Till today, Malaysia does pay approximately US$1,000 to the Sulu Sultanate in accordance with the agreement. 

On June 22, 1962, the Republic of the Philippines officially filed a claim of sovereignty and ownership over North Borneo to the British Ambassador to Manila. The following year, talks between the British and Philippine Governments were held in London. The discussion resulted in a Joint Final Communique’ issued by both governments stating both their claims. It was agreed that further discussion is pursued through diplomatic channels. 

During President Diosdado Macapagal’s term, the reigning Sultan of Sulu, Sultan Mohammad Esmail Kiram. formally ceded all rights, proprietary, title, dominion, and sovereignty of North Borneo to the Republic of the Philippines in 1962. The cession effectively gave the Philippine Government the full authority to pursue the claim in the international court. In 1963, the Federation of Malaya was reconstituted into Malaysia, with North Borneo. renamed as Sabah. as one of its states. The new sovereign state has become the successor of the British Crown’s interest in Sabah. After consulting with the Congress and foreign policy advisers, President Diosdado. Macapagal decided to withhold recognition of the Federation of Malaysia until Malaysia states its willingness to abide by the Manila Accord.

The Manila Accord was signed in 1963, by Indonesia, the Federation of Malaya and the Philippines agreeing to peacefully resolve the issue of North Borneo. After several years of neglect, the issue came up again in 2013, over 200 followers of Jamalul Kiram III, one of the claimants to the throne of the Sultanate of Sulu, landed in Lahad Data Village in Sabah. Their aim was to assert the pending territorial claim. Once again, the territorial controversy emerged on the international scene. To date, no settlement to the claim has been proposed yet. The dispute has disrupted the diplomatic relations between the Philippines and Malaysia. both being members of ASEAN. Efforts to find a peaceful resolution to the situation are being made, to ensure that human rights are respected and loss of lives are prevented.

Malaysian Flag with Sabah Flag

Sabah Dispute with Phillippines (North Borneo Issue)

The North Borneo dispute, also known as the Sabah dispute, is the territorial dispute between Malaysia and the Philippines. The Philippines, presenting itself as the successor state of the Sultanate of Sulu, retains a dormant claim on Sabah on the basis that the territory was only leased to the British North Borneo Company in 1878, with the sovereignty of the Sultanate over the territory never having been relinquished. However, Malaysia considers this dispute as a “non-issue” as it interprets the 1878 agreement as that of cession and that it deems that the residents of Sabah had exercised their right to self-determination when they joined to form the Malaysian federation in 1963

In February 2013, a long-standing but largely dormant territorial dispute over the Malaysian region of Sabah dramatically reignited. Armed rebels loyal to Jamalul Kiram III, a claimant to the traditional throne of the Sultanate of Sulu, occupied the village of Tando in Sabah in order to assert their claim to the territory. Malaysian security forces promptly surrounded the village. When attempts by both the Malaysian and Philippine governments to reach a peaceful solution with the Sultan’s supporters proved to be unsuccessful, the standoff escalated into armed conflict on 1 March 2013.  

This conflict stems from a lack of clarity in an agreement signed by both the Sultanate of Sulu and the British North Borneo Company in 1878. Depending on the translation of this agreement, Sabah was either ceded or leased to the British North Borneo Company. The Malaysian government views the status of Sabah as a non-issue, understanding the 1878 agreement as one which ceded sovereignty from Sulu to the British and subsequently to Malaysia. The Malaysian claim to Sabah is further reinforced by a 1963 referendum, in which a majority of residents voted to join the Malaysian federation.

However, the Philippines and the descendants of the Sultanate of Sulu understand the 1878 agreement as a lease signed specifically with the British North Borneo Company and that the 1963 referendum was illegitimate. The Philippine position is strengthened by the actions of the Malaysian government itself: each year, the Malaysian Embassy in the Philippines issues a cheque in the amount of 1,710 US dollars to the legal counsel of the heirs of the Sultanate of Sulu. This would seem to suggest to some degree that there is an implicit understanding on the part of Malaysian authorities that Sabah was leased rather than ceded, even if the official Malaysian position is that these annual cheques constitute a “cession payment” and not a “lease payment” or a form of “rent”.

While the claim to Sabah remained dormant since the resumption of diplomatic ties between Malaysia and the Philippines in 1989, tensions began to emerge again in 2010. Apparently no longer satisfied with the payments made by the Malaysian Embassy, the claimants to the Sulu throne demanded that Malaysia drastically increase its annual payments to 1 billion US dollars. The Malaysian authorities ignored these demands and continued to issue annual payments of 1,710 US dollars. No further movement was made on the issue until 12 February 2013, when armed rebels from the Philippines professing loyalty to Jamalul Kiram III occupied the village of Tando.

Philippine President Rodrigo Duterte has vowed to pursue the country’s claim to Sabah/ Image: Strait Times

The outbreak of violent conflict in Sabah is of some concern for the future of ASEAN as its member states seek further integration, even if the hostilities in Sabah can be characterized primarily as an intra-state conflict rather than an inter-state conflict as the Philippines has not become military involved and has expressed no intent to do so.


Sabah was ceded to the Sultan of Sulu by the Sultan of Brunei in 1704. Thus Sultan of Sulu became the sovereign ruler of Sabah.Succeeding Sultans of Brunei have denied that Sabah was given to the Sulu Sultanate.
The deed of 1878 executed by the Sultan of Sulu in favour of Baron von Overbeck and Alfred Dent was a contract of permanent lease and not of cession neither transfer of ownership nor sovereignty.The Deed of 1878 is considered a cession as supported by the 1903 Confirmation of Cession of Certain Islands and the Macaskie Judgment
The continued payment of the cession money by the Malaysian government to the Sulu Sultanate lends credibility to the claim of the Philippines that the Deed of 1875 was a contract of lease and not one of cessionThe Madrid Protocol of 1885 and the Treaty of Paris in I898 both define the boundaries of the Philippine Islands. Both place the boundary of the coast of Sabah and not one of them advances a claim to Sabah
The Philippines contends that Spain did not surrender sovereign rights over Sabah to Great Britain. The Spanish government never acquired control of Sulu and its dependencies.Both Sabah and Sarawak eventually agreed to join the Federation of Malaya (later Malaysia) by virtue of the Cobbold Commission.
The deed of 1878 took place between a sovereign ruler and two individuals acting in a private capacity. Overbeck and Dent not being sovereign entities. Could not acquire dominion and sovereignty over Sabah. Thus the acts proceeding from the Cession Order of 1946 did not transfer any sovereign rights to the British Crown.Sabahans have freely expressed their willingness to remain as a part of Malaysia as reaffirmed by the Separate Opinion of ICJ in its 2001 judgment concerning the sovereignty of Sipadan and Ligitan islands. Both of which are pan of Sabah.

Some workable solutions to settle the dispute peacefully include diplomatic negotiations, good offices, mediation, commissions of inquiry, commissions of conciliation, arbitration, adjudication, and resort to international organizations or regional agencies. These means of settling the dispute can only be used when the parties voluntarily consent to resort to these methods. It is, therefore, difficult to settle an international dispute unless the parties voluntarily give their consent to submit their case for settlement through any of these means for the pacific settlement of disputes.

The Philippines has resorted to diplomatic negotiation and has urged the judicial settlement of this dispute. In the situation facing both parties, Malaysia must state its position clearly that the sovereignty claim to the state of Sabah must be finally resolved. The prolongation of the Sabah claim would be self-serving and in no way contributes to the long-term interests of both countries. To date, Malaysia maintains that the Sabah claim has no basis under international law, thereby rejecting any calls from the Philippines to resolve the matter in the International Court of Justice.

On 16 July 2011, the Supreme Court of the Philippines ruled that the claim to Sabah is retained and may be pursued in the future. Since no law has yet been passed on the dropping of the Sabah claim, the Philippines still has the option to actively pursue the claim through internationally accepted norms that include adjudication by the International Court of Justice and bilateral negotiations. Through this method, definitive steps can be taken to find ways and means to resolve the dispute once and for all.

Subscribe to the International Relations Updates by The Kootneeti

* indicates required

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of The Kootneeti Team

Facebook Comments

Vriti Vankani

Vriti Vankani is an undergraduate student at University of Delhi. She can be reached at

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *