Two nations. One land. And a question that refuses to die, was Sabah merely leased… or permanently surrendered? For more than a century, that single question has haunted Southeast Asia, fueling one of its most sensitive and explosive territorial disputes. Today, the guns are silent, but the legal battles rage on. Heirs of the once-powerful Sultanate of Sulu are fighting for billions in compensation. Diplomats exchange sharp notes behind closed doors. And Sabah, known for its rich natural resources and strategic location, stands right in the middle of a high-stakes political firestorm.
Will the Philippines ever reclaim what many believe was never truly given away? Or will Malaysia, backed by years of effective control and international recognition, continue to assert its authority over the land? What makes this more than just a historical argument is the sheer scale of the consequences: identity, sovereignty, oil, and influence, all hang in the balance. And here’s the twist: Malaysia still pays a yearly sum to the heirs of the Sulu Sultanate. If they truly own Sabah, why keep paying?
In 2022, a European arbitration court shocked the world by siding with the Sulu heirs, ordering Malaysia to pay a staggering $14.92 billion. Suddenly, a forgotten colonial-era document signed in 1878 became front-page news again. This isn’t just a land dispute. It’s a geo-political drama, woven with colonial legacies, legal gray zones, and rising regional tension.
In this video, we’ll dive deep into the history, expose the legal battles, explore the emotional weight of the claim, and reveal why Sabah remains a ticking time bomb in ASEAN diplomacy. So we ask you, should the Philippines fight harder for Sabah? Or is it time to close this chapter and move on?
Historical Basis of the Philippine Claim: The Legacy of the Sultanate of Sulu
To understand the heart of the Sabah dispute, we must travel back over 300 years, to a time of sultans, revolts, and royal favors. In 1704, the Sultan of Brunei, in gratitude for military assistance during a rebellion, granted the territory of Sabah (then North Borneo) to the Sultan of Sulu. This wasn’t just a thank-you note, it was a royal cession of land, setting the foundation for the Philippine claim that would echo through centuries.
Fast forward to 1878, and the story gets even more complicated. Sultan Jamalul Alam of Sulu entered into an agreement with two European businessmen, Baron von Overbeck and Alfred Dent, who represented the British North Borneo Company. This document would become the most disputed piece of paper in Southeast Asian history. The key controversy? The original contract was written in an old variant of Malay, and whether it meant a “lease” or a “cession” remains hotly debated to this day. The Sulu interpretation and later the Philippine government’s, insists it was only a lease, meaning ownership was never surrendered. Malaysia, however, views it as a full cession, sealing Sabah’s fate under their flag.
What adds fuel to this historical fire is the money. The agreement included annual payments to the Sultan and his heirs, a practice Malaysia continued even after gaining independence. But in 2013, those payments were abruptly stopped, especially after the Lahad Datu standoff, an armed incursion into Sabah by followers of the Sultanate of Sulu. This action reignited emotions across the Philippines, with many Filipinos asking: if it was a full cession, why was rent still being paid?
The Philippine government formally stepped into the picture in 1962, when the heirs of the Sultan of Sulu authorized Manila to pursue the claim on their behalf. That same year, President Diosdado Macapagal lodged a formal assertion of sovereignty over Sabah to the British government, setting in motion decades of diplomatic friction. The Sultanate even issued a formal transfer of sovereignty to the Philippines, symbolically passing the torch. But decades later, in 1989, and again as recently as 2025, the Sultanate’s descendants reasserted their own authority, saying they never intended to permanently surrender their rights, thus reopening questions of legitimacy.
This deep historical foundation, rooted in royal politics, colonial ambition, and legal gray zones, remains the bedrock of the Philippine claim to Sabah. And with recent international arbitration rulings and revived interest from the Sulu heirs, the story is far from over.
Malaysia’s Stand: “Sabah Is Ours — Case Closed.
While the Philippines holds firm to its historical and legal claims, Malaysia isn’t backing down, and its counter-arguments are just as layered, strategic, and emotionally charged. At the center of its position is the same 1878 agreement. But where the Philippines sees a lease, Malaysia sees a full and final cession of sovereignty. According to their interpretation, the British North Borneo Company legally acquired the territory, and that ownership was passed down in full — eventually leading to Sabah’s rightful integration into the Malaysian Federation.
But Malaysia’s strongest argument may not lie in old documents, it lies in the voice of the people. In 1963, as part of the formation of Malaysia, the United Nations conducted a fact-finding mission, at the request of not just Malaysia, but also Indonesia and the Philippines. The result? An overwhelming number of Sabahans expressed their desire to join Malaysia. Self-determination, Malaysia argues, is the cornerstone of modern international law, and the people of Sabah chose their future. For Kuala Lumpur, that moment was decisive.
Since then, Malaysia has governed Sabah continuously and effectively. They point to decades of infrastructure development, democratic participation, and administrative control as proof that Sabah is not just Malaysian on paper, it’s Malaysian in practice, every single day. This concept is known in international law as “effective occupation,” and it’s a powerful tool for states to assert sovereignty.
To further solidify its position, Malaysia has repeatedly labeled the Philippine claim as a “non-issue”, diplomatically brushing it aside as outdated and irrelevant. From Malaysia’s perspective, reopening this case is not only unnecessary but also a threat to regional stability and unity within ASEAN.
Finally, Malaysia hasn’t just rejected the Philippines’ verbal assertions, it has consistently blocked Philippine submissions to international bodies like the United Nations, especially when it comes to claims over the continental shelf that extends from Sabah. These diplomatic rejections send a clear message: Malaysia is not entertaining negotiations over Sabah, period.
In Kuala Lumpur’s eyes, the matter is closed. But in Manila and among many Filipinos and descendants of the Sulu Sultanate, the fight is far from over.
Legal and Diplomatic Maneuvers: Battles in Courtrooms and Diplomacy Tables
While guns have never been drawn between the Philippines and Malaysia over Sabah, the battlefield has shifted, to legal courts, UN halls, and diplomatic corridors. And Manila, over the decades, has not remained silent.
The Philippines’ first major move came with the Manila Accord of 1963, signed by Malaysia, Indonesia, and the Philippines. This agreement made one thing crystal clear: Sabah’s inclusion in the Malaysian Federation would not prejudice the Philippine claim. It was a diplomatic acknowledgment that the matter was unresolved, and that it must be settled peacefully, in accordance with international law. But while Malaysia interprets this accord as merely symbolic, the Philippines sees it as a cornerstone of legitimacy.
Then came Republic Act 5446 in 1968, a bold legal step that redefined the Philippine territorial baselines, and notably included North Borneo (Sabah) as part of its national domain. Despite its symbolic weight, it drew sharp responses from Malaysia and stirred debates in ASEAN.
In more recent years, the Philippines has continued to make its presence known on the global legal stage. A March 2025 note verbale to the United Nations was just the latest in a series of documents reasserting sovereignty over Sabah. These usually come in response to Malaysia’s objections to Philippine claims over the extended continental shelf, a resource-rich area extending from Sabah’s coasts. But perhaps the most crucial move, legally speaking, is the Philippines’ attempt to elevate the issue to the International Court of Justice (ICJ). Unfortunately, there’s a catch: the ICJ requires both parties to consent to jurisdiction and Malaysia has repeatedly declined.
But the Philippine government isn’t the only player anymore. The heirs of the Sultanate of Sulu have taken matters into their own hands, literally. In 2022, a European arbitration court awarded them a jaw-dropping $14.92 billion in compensation from Malaysia, citing the country’s sudden halt of annual payments. Malaysia rejected the award outright, refusing to recognize its legitimacy. Still, the move made global headlines and reignited public interest in the forgotten royal family’s role.
These heirs didn’t stop there. In a stunning twist, they revoked the 1962 transfer of sovereignty to the Philippine government. Their reason? Manila failed to act decisively, allowed the issue to fade, and didn’t even include Sabah in the 1987 Philippine Constitution. Now, they’re pursuing a separate, direct claim, even seeking U.S. support for a 2004 petition to the United Nations demanding restitution and justice.
Malaysia, for its part, has drawn a hard line. It categorically rejects the arbitration rulings, branding them as opportunistic attempts to exploit historical ambiguity for financial gain. Kuala Lumpur insists that Sabah is an integral part of its territory and that dredging up the dispute only threatens ASEAN unity and regional peace.
The legal chessboard is active, but there’s no checkmate in sight. For now, it’s a tense standoff between diplomacy, royal legacy, international law, and national pride.
Geopolitical and Regional Implications: Beyond Borders, Into the Fire
What makes the Sabah dispute more than just a historical quarrel is its ripple effect across Southeast Asia, politically, economically, and even militarily. At the heart of it all is a fundamental question: Can ASEAN remain united while two of its founding members quietly clash over territory?
For decades, the Sabah claim has been a quiet source of friction between the Philippines and Malaysia. Though ASEAN follows a strict non-interference principle, such unresolved disputes challenge the bloc’s image of unity and cohesion. Every diplomatic flare-up or legal filing threatens to weaken regional trust, especially in moments when ASEAN needs solidarity to face larger threats.
The stakes aren’t just political. There’s an economic cost too. Investors value stability, and ongoing legal battles over sovereignty, especially ones that could involve billions of dollars and potential unrest, send the wrong message. Trade, tourism, and development in Sabah and surrounding regions can all suffer under the shadow of geopolitical uncertainty.
Second Thomas Shoal Resupply Mission: Did Manila Ask Beijing?
And then there’s the elephant in the room, the South China Sea. The Philippines’ renewed interest in Sabah is unfolding at the same time as major standoffs with China in contested maritime zones. Malaysia, too, has overlapping claims in the South China Sea. Now, Malaysia is rejecting the Philippines’ continental shelf submissions, particularly when those claims project from Sabah’s baselines. This means the Sabah issue isn’t isolated; it’s part of a bigger power puzzle, one that Beijing could exploit.
This leads to a growing fear: external interference. Analysts have warned that global powers, especially China, could manipulate the Sabah issue to destabilize ASEAN from within. A distracted, divided bloc plays right into the hands of larger geopolitical players who thrive on disunity and distraction.
Finally, let’s not forget the human cost. In 2013, the Lahad Datu standoff saw followers of the Sulu Sultanate enter Sabah in a violent attempt to reclaim the land. The result? Deadly firefights, hostage situations, and diplomatic chaos. It was a stark reminder that this isn’t just a paper war, it has the potential to explode into real-world conflict, affecting lives on both sides of the sea.
In short, the Sabah issue is no longer just about history or legality, it’s a live wire in the fabric of Southeast Asia’s future.
Outlook on the Dispute: Dormant Fire, Not Dead Ashes
So where does the long-running Sabah dispute stand today? While passions still run deep in certain circles, the possibility of military confrontation is virtually nonexistent. Malaysia maintains tight administrative control over Sabah, and both countries remain committed, at least outwardly, to diplomacy and regional peace under ASEAN.
But that doesn’t mean the conflict is over. Far from it. Several potential resolution pathways exist, though none come without serious roadblocks. Bilateral diplomacy, while still alive, often stalls on the core issue: one side sees a lease; the other sees a cession. The legal route through the International Court of Justice remains blocked, because it requires mutual consent, and Malaysia has consistently said “no.” Until that changes, the courtroom remains out of reach.
Interestingly, the spotlight has shifted. The Sultanate of Sulu’s heirs have pivoted away from sovereignty and toward financial restitution, winning multi-billion-dollar awards in international arbitration. Their fight, for now, appears more about compensation than land, though the symbolism of their claim continues to inspire heated debates across both nations.
Philippines on High Alert as China Makes Aggressive Move on Reef | South China Sea Crisis
On the Philippine side, the current strategy is subtle but steady: maintaining the claim through UN diplomatic notes, legal positioning over maritime zones, and internal legislation. It’s a dormant claim, kept alive on paper, perhaps waiting for a more favorable global or regional climate.
Malaysia, however, remains immovable. Backed by the 1963 UN referendum, decades of governance, and international recognition, Kuala Lumpur sees no reason to reopen the file. For them, Sabah is not up for negotiation, and never was.
In reality, the Sabah issue is likely to linger in the background, flaring up in courtrooms, news headlines, and nationalist rhetoric, but unlikely to erupt into open conflict or dramatic change. Unless there’s a major geopolitical shift or both parties agree to submit to binding arbitration, the dispute will remain unresolved, a thorn in the side of regional diplomacy. But in geopolitics, even dormant fires can reignite.
